Market Overview

Gordon Haskett Isn't Ordering Up Domino's Pizza Stock Right Now

Share:
Gordon Haskett Isn't Ordering Up Domino's Pizza Stock Right Now

Investors may want to reconsider buying Domino's Pizza, Inc.'s (NYSE: DPZ) stock at current levels as shares are trading at its highest valuation in at least four years, according to Gordon Haskett.

The Domino's Pizza Analyst

Jeff Farmer initiated coverage of Domino's Pizza with a Hold rating and $320 price target.

The DPZ (NYSE: DPZ) Thesis

Domino's stock has gained 20% over the past two weeks alone and trading at 23 times 2021 estimated EBITDA which is the highest seen in years, Farmer wrote in the note. The stock at current levels is discounting two things, including ongoing moderation of third-party delivery competitors, and 2020 estimated U.S. same-store sales growth will come in ahead of current estimates of 3.7% by a large margin.

The research firm doesn't agree with the second point and expects same-store sales growth to come in at 4.2%. While this is ahead of current expectations, the company will see difficulties in showing incremental upside as management's "fortressing strategy" headwinds are likely to remain. Specifically, management lowered its long-term U.S. same-store sales growth outlook from 3% to 6% to 2% to 5% back in early October due to a "sales drag" in the fortressing strategy.

Bottom line, Domino's is likely to continue delivering superior sales growth versus its peers over the coming years and this justifies a "healthy valuation premium" -- but one that is "modestly below current levels," the analyst wrote.

DPZ Price Action

Shares of Domino's Pizza were trading lower by 2.64% Friday afternoon at $338.85.

Related Links

Cowen Downgrades Domino's After 'Robust' Stock Gains

The Street Reacts To Domino's Q4 Earnings, 25% Stock Rise

Latest Ratings for DPZ

DateFirmActionFromTo
Jan 2021Goldman SachsInitiates Coverage OnBuy
Jan 2021MKM PartnersMaintainsNeutral
Jan 2021Stephens & Co.DowngradesOverweightEqual-Weight

View More Analyst Ratings for DPZ
View the Latest Analyst Ratings

 

Related Articles (DPZ)

View Comments and Join the Discussion!

Posted-In: food Gordon HaskettAnalyst Color Price Target Initiation Restaurants Analyst Ratings General

Latest Ratings

StockFirmActionPT
URIVertical ResearchInitiates Coverage On310.0
PCARVertical ResearchInitiates Coverage On95.0
DEVertical ResearchInitiates Coverage On345.0
CNHIVertical ResearchInitiates Coverage On16.0
AGCOVertical ResearchInitiates Coverage On119.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com