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Domino’s Falling: Pizza-Maker Delivers Glob of Stale Dough (DPZ)

Posted on February 4, 2021

Just as garlic is headed toward commoditization, so, too, we believe, is pizza.

And that’s why we’re highlighting international grease merchants Domino’s Pizza today (NYSE:DPZ), a company that prides itself on peddling cheap goods to those who care little for their health.

Domino’s sells more pizza globally via their 17,000 outlets than anyone outside Vatican City, yet still their stock is in trouble.

Why?

Well, let’s consider the fundamentals –

  • To start, the stock trades at a cheesy 32.29x last year’s earnings,
  • Offers no P/B, and
  • Yields 0.83% annually.

Not much to chew on there; so why did the stock see such a strong first half in 2020?

I didn’t order this!

Much of the guff surrounding the rise was Batflu related.  That is, fast-food delivery businesses were making a genuine killing at that time – including a number of exchange-listed pizza slingers – and Domino’s appears to have piggy-backed on their success.

That said, DPZ’s earnings were crusty by comparison.  Thin, you might say.

And a look at the daily chart reveals just how overdone things are at present –

Maximum gain on the trade is $21.77. (difference between the PUT strikes less initial debit).

Many happy returns,

Matt McAbby

 

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