At least one analyst thinks you should not only be craving Domino's Pizza(NYSE: DPZ), you should be craving its stock.
UBS analyst Dennis Geiger kept a buy rating on the company's shares but raised his price target on the stock from $480 to $526 after Domino's reported a solid quarterly result on Monday. That new price target would represent an 18% gain from Domino's recent price.
The bullish view comes after the company beat earnings expectations for the fourth quarter and gave investors several levers it plans to use to continue growing in 2024.
Hungry for dividends
Some investors already anticipated the good news from Domino's. Its stock is up 50% in the last year.
But the company clearly has confidence that growth in the business can continue. In addition to announcing global sales grew more than 5% in 2023, Domino's explained how it plans to keep growth going. It reinforced its confidence in the business by raising its quarterly dividend by 25% and increasing its existing share buyback program by $1 billion.
Domino's management previously said it would spur growth by opening at least 1,100 new stores through 2028 which will result in annualized sales growth of 7% through that time. It also is using a partnership with Uber Technologies to boost its delivery sales. CEO Russell Weiner stated, "Domino's foundation has never been stronger. These results give us confidence in our brand and the company's ability to win and create meaningful value for our shareholders."
While Domino's stock trades at a relatively high price-to-earnings (P/E) ratio of about 30.5, that is still slightly below its three-year average. That helps explain why some analysts see more stock appreciation ahead, and why both income and growth investors might want to look closer at Domino's.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino's Pizza and Uber Technologies. The Motley Fool has a disclosure policy.
