Domino’s as Inventor’s Choice

More than being known to be the innovators of delivery services, Domino’s Pizza has also brought investors great returns. The past 12 months saw the pizza company’s stock almost doubled with continuous earnings and added confidence by investors. Shareholders also get great value with the company’s dividend policy.

Unique Identity

The pizza industry is a highly competitive business and specializing in the delivery service brings about an unmatched quality of the company in serving its customers.

With a reported 21.3 percent increase in earnings per share at $0.57 during the second quarter, it was clear what the goal of Domino’s Pizza is with its aggressive expansion plan that is evident with the opening of 101 stores in various countries in the 2nd quarter alone. Its international division also reported same store sales at 5.8%.

Some Countries Are Not Performing

Though the expansion of Domino’s to certain countries are vast, performance in some countries are not doing as great as expected. The CFO of Domino’s UK sold shares and incidentally followed by two of his directors with a huge amount of shares as well with regards to their unsatisfactory performance at the first quarter. That also goes to sales within the UK which is also weaker in comparison.

Jubilant Foodworks, the company which runs Domino’s in India saw its growth rate to be greatly decreasing from 22.3% to 6.3% in the first three months of the year. New products were introduced by Jubilant Foodworks in order to avert further decline.

Long-term debt would pose a problem with Domino’s shareholders with the problems outside of the US. Though the performance in the US is steady and liquidity is not yet an issue as of the moment, the company’s progressive decline in international shores would make earnings slow down with debt totaling $1.52 billion and cash flow an estimated ¼ of the total debt of the company.

Papa John’s becoming better

Compared to its estimated earnings per share of $0.69, Papa John’s posted a net income of $17.2 million dollars or $0.77 per share in the 2nd quarter.

Papa John’s growth is technically a better option than Domino’s if one would look solely on its long-term debt at $0.13 billion and its current ratio at 1.5.One big reason why Domino’s seemed to fare better is its huge international presence.

Papa john’s doesn’t usually put in traditional advertisements but was forced to because of thriving competition in the industry. Papa John’s is now the official pizza sponsor of the NFL and is number 1 in customer satisfaction in the US.

Investing in Papa John’s is a wise investment move despite it being not a huge international brand. The figures show how it mightily matched Domino’s in terms of growth in the US and its lack of global presence may be seen as a positive outlook rather than a negative one.

Yum! Brands not working out

The company that holds the food brands KFC, Taco Bell and Pizza Hut has been in a lot of allegations with its KFC brand in China with reports of using drugs for plumping chickens among others. Yum! has committed in meeting quality standards to sustain growth but since the allegations surfaced, its growth of 11.8% is far from the S&P 500’s 24.7%

The volatility of its stock also affects growth for Yum! as a number of price per share movements was noticed for the past 12 months totaling a net capital appreciation of only 11% making Domino’s a better option than Yum!

Domino’s is the best choice

Domino’s ingenuity when it comes to delivery service has reached India as its CEO created a system for its delivery service without violating laws in their country and provides pizzas to homes and establishments with the most efficient way. This characteristic of Domino’s will lead them to greater heights in the years to come.

Investors should look deep in to a company not only its profile and soundliness but also the struggles it is facing. Being a stable company, Domino’s has established itself to be a strong competitor in the pizza industry.

Earnings from stock pay handsome dividends when reviewed extensively. Long term investments greatly affect dividend payouts by the compounding effect. One must identify every detail to avoid massive losses when it comes to investing.

Posted by Diane Araga, on September 12, 2013 at 10:00 AM