Domino‘s Pizza Inc: Valuation Not a Catalyst But Share Gains May Be

Research evidence excerpt

Domino‘s Pizza Inc: Valuation Not a Catalyst But Share Gains May Be

Domino's Pizza Inc UBS Research

Still positioned for market share gains

Despite recent pressure on US sales trends and DPZ shares, we see upside potential for We utilized a UBS Evidence Lab

shares as US sss should improve over time supported by initiatives to drive traffic and survey of ~1.6K QSR customers to

brand positioning which should enable category share gains. Additionally, we expect help assess key DPZ brand

global net unit expansion should accelerate over the coming years. While we anticipate perceptions, recent pressures, and

2Q US sss could be negative given macro headwinds and competitive pressures, and 2H drivers to improve visit frequency.

trends could be challenged as a result of difficult comparisons, we believe DPZ maintains

longer-term sales drivers to sustain market share gains and support continued growth in

franchisee cash flows. Above-peer domestic sss performance and faster global unit

growth should drive upside for shares over time from the current multiyear valuation

lows (15x NTM EPS vs ~26x 5y avg). Results from our latest QSR survey indicate

Domino's should continue to benefit from solid consumer engagement, supported by

favorable value perceptions and still positive visit intent.

Figure 1: Domino's sss should continue to outperform the Figure 2: ...with global net unit growth set to accelerate

US pizza category and larger chain competitors… over the coming years.

ompetitors… ate over the coming years.

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Source: Company reports, Consensus Metrix Source: Company reports, UBS estimates