Author Topic: DPZ - Domino's Pizza  (Read 10210 times)

chrispy

  • Sr. Member
  • ****
  • Posts: 260
Re: DPZ - Domino's Pizza
« Reply #30 on: March 26, 2019, 07:17:49 AM »
It is looking interesting now and I may buy a small amount as well.

Growth is slowing slightly but the main concern (I believe) is that much of the debt was used to fuel growth via buybacks


KCLarkin

  • Hero Member
  • *****
  • Posts: 1630
Re: DPZ - Domino's Pizza
« Reply #31 on: March 26, 2019, 11:12:08 AM »
It is looking interesting now and I may buy a small amount as well.

Growth is slowing slightly but the main concern (I believe) is that much of the debt was used to fuel growth via buybacks

The leveraged recapitalizations are an interesting wrinkle. The market cap at the start of 2014 was about $4B. Over the last five years, they have returned $3B to shareholders through dividends and buybacks. However, the organic growth is so good (and share price so high) that the recaps have only given a modest boost to EPS growth.

Though I'd prefer they were less aggressive, I like that they manage their capital structure. Contrast DPZ, which has added perhaps 3-5% per year by doing leveraged recaps, versus Google which has perhaps subtracted 3-5% per year by hoarding cash. Over time, that is a huge gap.

Of course, leveraged recaps will be a disaster if the fundamentals start to suffer. WTW before the Oprah investment is an interesting case study. But even with that disaster:
https://www.forbes.com/sites/nathanvardi/2018/12/20/deal-master-debbane-meet-the-secretive-lebanese-immigrant-behind-oprahs-weight-watchers-windfall/#222fe6d15bb8

Anyway, as long as they can grow 8-12% per year with very little capital, I am not worried about the debt.



Castanza

  • Jr. Member
  • **
  • Posts: 85
Re: DPZ - Domino's Pizza
« Reply #32 on: March 26, 2019, 11:18:46 AM »
Papa Johns has just restructured. I believe Shaq was added to the board and they are making extreme steps to mitigate the negative press it received when the former CEO went on a racist rage. They seem to be reinventing themselves. Just saw this on the weekend and have been wanting to dig into it. Their stock has been beaten down pretty badly and there could be some value here.

tol1

  • Full Member
  • ***
  • Posts: 151
Re: DPZ - Domino's Pizza
« Reply #33 on: March 27, 2019, 01:31:11 AM »
Has anyone looked at how the unit CoC return has evolved over time?

Spekulatius

  • Hero Member
  • *****
  • Posts: 2539
Re: DPZ - Domino's Pizza
« Reply #34 on: March 27, 2019, 03:57:48 AM »
Papa Johns has just restructured. I believe Shaq was added to the board and they are making extreme steps to mitigate the negative press it received when the former CEO went on a racist rage. They seem to be reinventing themselves. Just saw this on the weekend and have been wanting to dig into it. Their stock has been beaten down pretty badly and there could be some value here.

The stock looks very pricey to me. They need a hell of an earnings recovery to justify the current valuation.
To be a realist, one has to believe in miracles.

Castanza

  • Jr. Member
  • **
  • Posts: 85
Re: DPZ - Domino's Pizza
« Reply #35 on: March 27, 2019, 06:12:31 AM »
Papa Johns has just restructured. I believe Shaq was added to the board and they are making extreme steps to mitigate the negative press it received when the former CEO went on a racist rage. They seem to be reinventing themselves. Just saw this on the weekend and have been wanting to dig into it. Their stock has been beaten down pretty badly and there could be some value here.

The stock looks very pricey to me. They need a hell of an earnings recovery to justify the current valuation.

"Could have value." In the pizza world it seems like there would be a lot of fixed costs for companies across the board. Starboard just put 200M into Papa back in Feb. They were a big catalysts for Olive Garden (Darden) who is doing quite well now. That being said, I typically don't follow the restaurant sector. There is a lot of things I don't understand about it, its very trendy etc.  Redemption could take a few years for sure and it will probably keep going down from here. But at some point this could be a really interesting value play. It's hard to carry a moat in the pizza industry.

KCLarkin

  • Hero Member
  • *****
  • Posts: 1630

tol1

  • Full Member
  • ***
  • Posts: 151
Re: DPZ - Domino's Pizza
« Reply #37 on: March 31, 2019, 07:55:10 AM »
https://aaronallen.com/wp-content/uploads/2018/08/ROA-Median.png

If this was available for restaurant level CoC over time would tell us a lot about how saturated the market is.

KCLarkin

  • Hero Member
  • *****
  • Posts: 1630
Re: DPZ - Domino's Pizza
« Reply #38 on: March 31, 2019, 08:08:04 AM »
If this was available for restaurant level CoC over time would tell us a lot about how saturated the market is.

The domestic takeout/delivery pizza market is obviously saturated. However, DPZ is taking market share. They have 31% market share up from 23% 5 years ago.

tol1

  • Full Member
  • ***
  • Posts: 151
Re: DPZ - Domino's Pizza
« Reply #39 on: March 31, 2019, 08:23:35 AM »
If this was available for restaurant level CoC over time would tell us a lot about how saturated the market is.

The domestic takeout/delivery pizza market is obviously saturated. However, DPZ is taking market share. They have 31% market share up from 23% 5 years ago.
Meant the entire QSR/fast casual space across pizza/burger etc. The ROA comparison is pointless anyway as some are almost 100% franchisors (DPZ), whereas others are not (CMG).