Domino’s Larger than Expected

The Online Investor recently reported that the Russell 3000 component Dominos Pizza Inc. (NYSE: DPZ) has a larger market cap compared to the smaller end of the S&P 500. It was identified currently through the ordered stocks by largest marketing capitalization.

Investors rely on market capitalization as an important figure in order to compare the value of a company’s stock to the value given by the stock market. It would be meaningless for investors, specially beginning investors to look only at the price of a stock without looking on how many shares the company has. Market capitalization provides a real comparison on the value of two stocks.

Market capitalization also determines a company’s size and is placed on competition with other companies with relatively the same size. With this in mind, other intermediaries such as mutual funds and ETFs can form their strategies on which stock to own which can have a huge impact on a certain company. Mutual funds and ETFs can now chose where they want to own a stock. A great example would be a mutual fund which could choose to focus on buying stock only on companies with Large Cap, companies which has a value of $10 billion up.  They could also choose from up and coming smaller companies. On the other hand, ETFs that are solely concentrated on S&P 500 companies can sell their shares if the company they are invested in falls out of the category of being an S&P 500 company and buy on newer companies that enter on the said index.

On Tuesday’s closing bell, DPZ is at about 0.7%.
Posted by Diane Araga, on August 16, 2013 at 10:00 AM