Among the 22 analysts that cover Domino’s Pizza (DPZ), 63.6% recommended a “buy,” while 36.4% recommended a “hold.” None of the analysts recommended a “sell.” On average, analysts have set a 12-month target price of $294, which represents a return potential of 2.4% from Domino’s closing price of $287.18 on February 14.
Since the beginning of December, Barclays and BTIG have raised their target prices. Barclays has increased its target price from $255 to $261. BTIG increased its target price from $310 to $335. During this period, UBS and Cowen and Company initiated their coverage on Domino’s Pizza. UBS gave the stock a “neutral” rating with a target price of $285. Cowen and Company gave the stock an “outperform” rating with a target price of $290. On January 9, Oppenheimer cut its target price from $261 to $255.
Among the seven analysts following Papa John’s (PZZA), 57.1% recommended a “buy,” while 42.9% recommended a “hold.” Analysts’ average target price is $52.40 with a return potential of 20.4% from its closing price of 43.51 on February 14.
Among the 22 analysts following Yum! Brands (YUM), 40.9% recommended a “buy,” 54.5% recommended a “hold,” and 4.5% recommended a “sell.” Analysts have set an average target price of $97.41 for Yum! Brands with a return potential of 3.8% from its closing price of 93.85 on February 14.
Domino’s higher stock price has increased its valuation multiple. As of February 14, Domino’s was trading at a forward PE ratio of 30.1x compared to 29.4x before the announcement of its third-quarter earnings. On the same day, Papa John’s and Yum! Brands were trading at forward PE ratios of 33.4x and 24.4x, respectively.
On February 14, Domino’s was trading at 33.9x analysts’ 2018 EPS expectation of $8.48 and at 30.1x the 2019 EPS expectation of $9.55. The company’s EPS is expected to increase 43.5% in 2018 and 12.6% in 2019.