In 2008, domestic stores same store sales were down 2.2%, in 2009 they were down .9%. Enter new CEO J. Patrick Doyle. Doyle took the reigns of the company in March of 2010. How has he done so far?
In 2010 the company recorded domestic same store sales growth of 9.7%, in 2011 4.1%, and in 2012 1.3%. Although it wasn’t Doyle’s doing, international same store sales have increased for 19 straight years!
Earnings per share, diluted and adjusted, were $0.47 in the first quarter of 2012. In the first quarter of 2009 the figure was $0.20. That equals out to a 4-year CAGR of 23.8%.
The company also recently started paying a dividend. Its yield stands at 1.3%. That’s a little lower than Yum’s yield of 1.9%, but Domino’s Pizza, Inc. (NYSE:DPZ) very low payout ratio of 9% is 30 percentage points lower than that of Yum.
Despite this Patrick Doyle induced growth spurt, the company still has its problems. Namely it is incredibly levered, with $1.53 billion in long term debt and shareholder’s equity is a negative $1.32 billion.
While real Italians probably think Domino’s Pizza, Inc. (NYSE:DPZ) is garbage (to be fair it kind of is compared with an authentic Italian pizza) personally I think the pizza is pretty good. A little greasy, but definitely delicious.
And the value is absolutely incredible, eight bucks for a large three topping pizza? I don’t care if I do have to go and pick it up, that’s an awesome deal if I ever saw one.
I live in a college town and 9.5 delivery drivers out of 10 that I witness delivering pizzas work for Domino’s Pizza, Inc. (NYSE:DPZ). College students aren’t made of money, so most of the time they opt for Domino’s. The vast majority of Americans aren’t made of money either, the vast majority of Americans also love pizza.
Foolish final thoughts
Investing in pizza probably isn’t nearly as fun as eating it. Unless you hit what Peter Lynch likes to call a multi-bagger. But in the case of these three pizza companies, I highly doubt purchasing any of them will result in a multi-bagger anytime soon.
Papa John’s Int’l, Inc. (NASDAQ:PZZA) has been picking it up lately, but its growth over the past four years has been less than impressive. While the company has been buying back shares, shareholder’s equity and net income have both gone practically nowhere over the last few years.
Yum! Brands, Inc. (NYSE:YUM) is a company with a trio of some of the best known names in fast food. You can count on them for steady, yet unspectacular, growth. This is a company that Peter Lynch would probably classify as a stalwart.
Domino’s Pizza, Inc. (NYSE:DPZ) has engineered an incredibly impressive turnaround. The company is growing incredibly fast thanks to its improved pizza and very reasonable prices. The dividend also looks very attractive, especially with such a low payout ratio.
If I were to invest in one of these companies, it would have to be Domino’s. But investors in the company need to make sure it maintains its growth. If not, investing in this company with negative equity of over $1 billion will prove to be a huge mistake.
The article Food for Thought, and It’s Pizza! originally appeared on Fool.com and is written by Ryan Palmer.
Fool blogger Ryan Palmer has no position in any of the stocks mentioned. The Motley Fool owns shares of Papa John’s International. Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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