Domino's Pizza Inc Common Stock (DPZ)

Conclusion

Domino's Pizza, Inc. operates pizza stores worldwide through company-owned and franchised locations, across U.S. Stores, International Franchise and Supply Chain segments. At a price of 334.18 USD on 2026-11-09, the market capitalisation is 10.99 billion USD.

The verdict is undervalued. Today's multiples sit well below their own ten-year medians: price to earnings is 18.0 against a median of 30.8, and enterprise value to EBITDA is 15.5 against 23.0. The discounted cash flow gives 344.39 USD per share at a discount rate of 9.73%. The fair value band runs from 365.21 to 547.81 USD with a midpoint of 456.51 USD, a margin of safety of 36.6% at the current price. The reverse DCF implies revenue growth of 6.2% a year, against revenue growth of 3.7% over five years, so the price asks for somewhat faster growth than the company has delivered.

The strongest numbers are the return on invested capital of 77.8% against a weighted average cost of capital of 7.85%, free cash flow conversion of 104.3% over the trailing twelve months, and a Piotroski score of 7 out of 9. The weakest are net debt to EBITDA of 4.78, a current ratio of 0.49, and an Ohlson-model estimate of high insolvency risk. Leverage is the item most able to break the case.

Financial health

Financial strength is red, held back by net debt to EBITDA of 4.78, a current ratio of 0.49 and a quick ratio of 0.27. Interest coverage of 4.69 is neutral, and the Altman Z-score of 1.98 sits in the grey zone. The Altman model was designed for manufacturers, and this company is not one, so that score is only a rough guide. Debt to equity is not available. The company reports negative shareholder equity. Insolvency risk: high, about 99.99% by the estimate of the Ohlson model over one to two years. That estimate rests on figures as of 2025-12-31, and it is the most important warning in this analysis for a reader who is not already comfortable with a heavily indebted balance sheet.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 104.3% over the trailing twelve months and 98.1% over five years. The accrual ratio is -10.76%, which means cash earnings exceed reported earnings. Stock-based compensation is 0.86% of revenue, and free cash flow after it is 591.9 million USD. The share count fell at a compound rate of 2.89% over five years, which reflects buybacks. The Piotroski score is 7 of 9, and the Beneish M-score of -2.76 is read as unlikely to signal manipulation. Over the last eight quarters the company beat earnings expectations three times and missed five times, with an average surprise of 0.88%. Estimates for the current year rose slightly over 90 days, while estimates for next year fell 1.22% over 90 days, with 16 downward revisions against 5 upward in the last 30 days.

Profitability

Profitability is green. The gross margin is 40.04% against a ten-year median of 38.64%, the operating margin is 19.75% against 18.10%, and the net margin is 12.03% against 11.33%. Operating margin stability is 4.44%. Return on invested capital is 77.8% against a weighted average cost of capital of 7.85%, and the reported gap is 69.98%. The five-year median return on invested capital is 68.36%. Return on equity is not available, so the leverage effect cannot be read directly. The DuPont split for 2025 shows a net margin of 12.18% and an asset turnover of 2.74x, which means returns come mainly from high asset turnover and a thin margin, with a balance sheet that is already strained.

Growth

Growth is yellow. Revenue compounded at 2.88% over three years, 3.71% over five years and 8.34% over ten years. Earnings per share grew 11.94% over three years, 7.23% over five years and 17.61% over ten years. Free cash flow per share grew 22.18% over three years, 9.06% over five years and 16.9% over ten years. Revenue grew in 9 of the last 10 comparable years. Recent top-line growth is slower than the long-run record, which is why the reverse DCF asks more of the future than the five-year history shows.

Valuation

Valuation is green. Against ten-year medians, price to earnings is 18.04 against 30.80, a premium of -41.4%. Enterprise value to EBITDA is 15.52 against 22.99, a premium of -32.5%. Price to free cash flow is 17.29 against 32.24, a premium of -46.4%, and price to sales is 2.17 against 3.50, a premium of -38.0%. The discounted cash flow gives 344.39 USD per share at a discount rate of 9.73%. The fair value from historical multiples is 568.62 USD. The fair value band runs from 365.21 to 547.81 USD with a midpoint of 456.51 USD, a margin of safety of 36.6% at a price of 334.18 USD. These are estimates built on fixed assumptions, including a 5% equity risk premium and capped growth, not price targets. The reverse DCF implies growth of 6.18%, against revenue growth of 3.71% and free cash flow per share growth of 9.06% over five years. The dividend yield is 2.29%, the forward yield is 2.38%, and the payout on free cash flow is 39.6%.

Risks

The leverage ratios are the main threat. Net debt to EBITDA of 4.78 leaves little room if operating earnings fall, and interest coverage of 4.69 would shrink quickly with a rise in borrowing costs. A current ratio of 0.49 means short-term obligations exceed short-term assets, which would strain the company in a weak quarter. The Ohlson estimate of high insolvency risk makes these points more serious. Debt to equity, return on equity and price to book are not available. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot show when debt falls due or which part of the business drives growth. The fair value figures depend on assumptions and are sensitive to them.