Tuesday, TD Cowen has increased its price target on shares of Domino's Pizza (NYSE:DPZ) to $550 from the previous $525 while maintaining a Buy rating on the stock. The revision comes in light of the pizza chain's disclosed plans for expanding its number of U.S. franchise locations in 2024.
According to the firm's analysis, Domino's Pizza is on track to open 197 new U.S. franchises this year, which slightly exceeds the approximately 183 new openings anticipated by Consensus Metrix. The analyst's perspective is optimistic, suggesting potential for exceeding their own estimate of 178 new stores, especially given Domino's successful surpassing of its 2023 franchise development goals.
The company's forward momentum appears to be strong as it moves past the most challenging industry development headwinds. The new price target is based on a 22 times forward two years enterprise value to EBITDA (EV/EBITDA) multiple, or a 29 times forward two years price to earnings (P/E) ratio.
The analyst's commentary highlights that Domino's has demonstrated a capacity to outperform development targets, which is a positive indicator for the company's growth trajectory. The maintenance of the Buy rating indicates continued confidence in the stock's performance.
The raised price target reflects the firm's analysis of Domino's financial metrics and its strategic growth initiatives, suggesting that the company is well-positioned for continued success in the competitive fast-food industry.
InvestingPro Insights
As Domino's Pizza (NYSE:DPZ) continues to expand its U.S. franchise operations, real-time data from InvestingPro provides a deeper look into the company's financial health and market performance. With a robust market capitalization of $17.2 billion and a P/E ratio standing at 33.35, DPZ is trading at a premium compared to many of its industry peers. This reflects a market expectation of continued growth and profitability, underscored by the company's impressive return on assets of 31.68% over the last twelve months as of Q1 2023.
InvestingPro Tips also reveal that Domino's has not only raised its dividend for 10 consecutive years but has also maintained dividend payments for 13 consecutive years, showcasing a commitment to returning value to shareholders. Moreover, 17 analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's financial future. For investors looking for further insights and tips on DPZ, InvestingPro offers additional analysis, with the opportunity to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
While the company's revenue growth has seen a slight decline of 1.27% over the last twelve months, the upcoming period holds promise as reflected by the analysts' revisions. As Domino's approaches its next earnings date on April 29, 2024, investors will be keen to see if the company's strategic initiatives and store expansions will translate into financial success and further stock appreciation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.