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Domino's Pizza, Inc. (NYSE:DPZ): What Does The Future Look Like?

Simply Wall St

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In March 2019, Domino's Pizza, Inc. (NYSE:DPZ) released its earnings update. Generally, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 11% next year compared with the higher past 5-year average growth rate of 19%. By 2020, we can expect Domino's Pizza’s bottom line to reach US$401m, a jump from the current trailing-twelve-month of US$362m. Below is a brief commentary on the longer term outlook the market has for Domino's Pizza. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Domino's Pizza

What can we expect from Domino's Pizza in the longer term?

Longer term expectations from the 20 analysts covering DPZ’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for DPZ, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:DPZ Past and Future Earnings, July 15th 2019

From the current net income level of US$362m and the final forecast of US$506m by 2022, the annual rate of growth for DPZ’s earnings is 11%. This leads to an EPS of $13.1 in the final year of projections relative to the current EPS of $8.65. With a current profit margin of 11%, this movement will result in a margin of 11% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Domino's Pizza, I've compiled three pertinent aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is Domino's Pizza worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Domino's Pizza is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Domino's Pizza? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.