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Today we're going to take a look at the well-established Domino's Pizza, Inc. (NASDAQ:DPZ). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$476 at one point, and dropping to the lows of US$402. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Domino's Pizza's current trading price of US$427 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Domino's Pizza’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Domino's Pizza
Is Domino's Pizza Still Cheap?
According to our valuation model, Domino's Pizza seems to be fairly priced at around 3.17% above our intrinsic value, which means if you buy Domino's Pizza today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $414.24, there’s only an insignificant downside when the price falls to its real value. In addition to this, Domino's Pizza has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Domino's Pizza generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Domino's Pizza's earnings over the next few years are expected to increase by 20%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in DPZ’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on DPZ, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.