Domino‘s Pizza Inc: 2Q Better Than Feared - Stock Cheap on FCF - Hosting HQ Visit August 26

研报英文原文证据摘录

Domino‘s Pizza Inc: 2Q Better Than Feared - Stock Cheap on FCF - Hosting HQ Visit August 26

0% EPS growth with a 3.0-3.5% FY 17.72 18.79 20.65

F27/28 dividend yield translating to ~10% annual TSR. The target also implies

Style Exposure

an optically low ~17.4x F28 earnings or ~14.3x F27 end EV/F28 Ebitda. We

see the current ~4.5x debt/Ebitda trend lower to ~4x by F28 and the company

returning ~$2b in shareholder returns from F27-29. A ~$2b capital return is

worth ~20% to the current equity value of DPZ.

• Against the 2023 Analyst Day guidance, F26 is falling against

expectations: 175 US net unit adds (vs 175+), SSS of +0.9% in 1Q26 and

+0.1% in 2Q26 (vs 3%+) and international unit growth of ~800 (925+). Of

course, the Iran conflict began Feb 28 - just after our Feb 24 upgrade - and put

disproportionate pressure on the lower income consumer but trends would

have likely been below expectations even without this event. The brand

became notably more dependent on boost/promotional weeks with

diminishing effectiveness, perhaps suggesting why incoming CEO Joe Jordan

stressed "executing with discipline." Still, both carryout and delivery SSS

traffic were said to be positive in 2Q26 with all the pressure in the 2Q26 US

system comp of +0.1% - while better than our -1.7% estimate - coming from

ticket as last year’s successful high ticket stuffed crust promotion was peak-

lapped against an unsuccessful premium series (with new slice sauce) that

failed to mix as expected.

• U.S. Business – including supply chain – is ~85% of segment-level

operating income. US new store development is 5x more valuable than the

average international store based on AUVs, royalty rate, and supply chain.

Despite the US system’s new unit volumes of 80% of AUVs the past few years,