- Equity Research Cheat Sheets
- Posts
- DPZ 3Q25 - Carryout explosion. Macro intensifying. What's next? Bull case $594. Bear case $340.
DPZ 3Q25 - Carryout explosion. Macro intensifying. What's next? Bull case $594. Bear case $340.
Cheat Sheets presented by stocktwits
DOMINO'S PIZZA INC (DPZ)
🍕 Pizza Leader | Rev +6.2% to $1.15B, US Comps +5.2%, Carryout +8.7%
Q3 2025: "Hungry for MORE" Delivering | Order Counts Positive | 21,750 Global Stores
💰 Market Cap: $14.5B | 🏢 Employees: 10,700 | 🌍 21,750 Stores (90+ Countries)
👨💼 CEO Russell Weiner | 🎯 Pizza Delivery & Carryout | 💎 65 Years Old (Founded 1960)
$426.20
📈 +$17.94 (+4.39%) Today
+1.9% YTD
Price Target Scenarios
18-Month Horizon (Mid-2027 Targets) - Based on Current Price $426.20
$594.00
Bull Case (+39%)
Unit Growth Accelerates
International Momentum
📊 Valuation:
2027E EPS: $24.00 × 24.75x P/E = $594/share
🚀 What's Needed:
US comps 6%+ sustained • International recovery 4-5% comps • 500+ net stores/year • Digital 90%+ of US sales • DoorDash/Uber drive 15%+ sales • Fortressing works • Operating margin 22%+ • Supply chain optimized • Labor stabilizes • Market rerates to 25x P/E
$510.00
Base Case (+20%)
Steady Execution
Guidance Hit
📊 Valuation:
2027E EPS: $22.50 × 22.7x P/E = $510/share
⚖️ What's Needed:
US comps 3-4% • International comps 2-3% • 350-400 net stores/year • Digital 88% US sales • Aggregators contribute 12-15% • Operating income +8-10% • Loyalty program drives frequency • Stuffed crust stays • Supply chain margins stable • Market values at 22-23x P/E (historical avg)
$340.00
Bear Case (-20%)
Consumer Recession
Competition Intensifies
📊 Valuation:
2027E EPS: $17.00 × 20x P/E = $340/share
🔻 What Could Go Wrong:
Consumer recession • US comps 0-1% or negative • International stays weak • Unit growth stalls <250/year • Labor costs spike • Delivery competition crushes margin • Uber/DoorDash take bigger cut • Pizza Hut/Papa John's fight back on value • Supply chain costs surge • Store closures accelerate • Market derates to 18-20x P/E
Bottom Line for Retail Investors
🏆
Beat on All Metrics That Matter
Revenue $1.15B beat by $10M. EPS $4.08 crushed $3.96 est (+3%). US comps +5.2% vs 4.2% expected. Global retail +6.3%. Operating income +11.8%. Russell: "Incredibly proud how our team is bringing Hungry for MORE to life and delivering best in class results."
💎
Store Growth Engine Firing
214 net new stores in Q3. 21,750 global now. 29 US (fortressing working). 185 international. 99% franchise = capital-light growth. Once stores profitable, franchisees don't leave. Competitors can't match unit economics.
📈
Carryout +8.7%, Delivery +2.5%, Order Counts Positive
Carryout accelerated to +8.7% (from +5.8% in Q2). Delivery +2.5% despite tough environment. Russell: "Carryout positive. Delivery positive. Order count growth positive. All resulted in meaningful market share growth." Parmesan Stuffed Crust crushing it. Best Deal Ever extended by franchisee request - driving PROFITABLE order counts. "We put dollars in the bank, not percents." Pricing only 1.3% of ticket - rest volume/mix.
⚠️
Q4 Macro "Intensifying" - Management Warning
Sandeep: "Seeing a slowing across restaurant industry to start Q4. Macro environment intensifying. If it intensifies further, could put pressure on full year same-store sales number." Net income DOWN 5.2% on $29.2M DPC Dash loss. International weak +1.7%, DPE had 200 store closures. Reiterated 3% US comp guidance but flagged risk. Stock at $426.20 up 4.4% post-earnings but at 24x P/E, any Q4 miss = pain. Not for weak hands if macro worsens.
📊 What Just Happened: Beat Across the Board, US Comps +5.2%, Operating Income +12.2%
Revenue Up 6.2% to $1.15B (Beat by $10M) • EPS $4.08 (Beat by $0.12) • Global Retail Sales +6.3% • US Same-Store Sales +5.2% (vs 4.2% Est) • Carryout +8.7% • Delivery +2.5% • Order Counts POSITIVE • Net Store Growth 214 • Operating Income +11.8% (ex-FX) • Free Cash Flow +31.8% (3 Qtrs) • Dividend $1.74 Declared • Q4 Macro "Intensifying" Per CFO 💪
💰
$1.15B
Q3 2025 Revenue
+6.2% YoY
⚡
+5.2%
US Same-Store
Beat 4.2% Est
🎯
$4.08
EPS Q3
Beat $3.96 Est
🚀
21,750
Global Stores
+214 Net in Q3
📞 Key Q3 2025 Earnings Call Highlights
🎊
Carryout +8.7%, Delivery +2.5%
Carryout accelerated from 5.8% to 8.7%. Delivery positive despite tough environment. Operating income +11.8%. Pricing only 1.3% - rest was VOLUME. US retail sales +7%. Beat QSR pizza category by massive margin. Bought back 166K shares at $450.
🚨
Positive Order Counts ALL Income Groups
Russell: "Order count growth positive. Up amongst ALL income groups for Q3. Second quarter in a row beating lower income trends." Breaking industry norms. Competitors using "desperate pricing that's probably not sustainable." DPZ pricing for profitability.
💎
Best Deal Extended By Franchisees
Russell: "Running LONGER than planned because franchisees ASKED for it. Driving profitable order counts. We put DOLLARS in bank, not percents." Stuffed crust cheese would wrap around earth. New website live - better conversion. Apps by year-end.
🔬
More Franchisees Building Stores
Russell: "Broadened builder base - smaller franchisees now adding. MORE PEOPLE building than prior years = easier to hit targets." Pipeline visibility better than last year. Refinanced $1B debt at 5.1%. $540M left on buyback.
📍 Russell - "Carryout, Delivery, Orders ALL Up": "Incredibly proud of our team. Carryout positive. Delivery positive. Order count growth positive = meaningful market share growth." Carryout +8.7%, Delivery +2.5%. Best Deal Ever extended by franchisee request.
🌍 Q4 Macro Warning: Sandeep: "Seeing slowing across restaurant industry at start of Q4. Macro intensifying. If it gets worse, could pressure full year comp." BUT: "We expect to continue gaining share. We've done so really well." Russell: "Short term headwinds = long term share gains for us."
💰 ALL Income Groups Up: Russell: "We were UP amongst ALL income groups in Q3. Second quarter in a row beating lower income trends. We're breaking industry norms." Pizza category now +1% YTD vs flat first half.
🔮 Aggregators Still Growing: Russell: "We deliver 1 in 3 pizzas but NOT at that share yet on aggregators. That's why it's a multiyear tailwind. Competition's pricing probably not sustainable." DoorDash 50% incremental. Loyalty compounding - database building on itself.
🚀 Why DPZ Bulls Are Right
💎
Carryout Accelerating +8.7%
Carryout up from 5.8% to 8.7%. Loyalty compounding. Sandeep: "Compounding frequency is the leading indicator." Database building. Russell: "Loyalty bigger in 24 than 23. Will be bigger in 25 than 24." Multi-year driver.
⚡
More Builders = Better Growth
Russell: "Broadened builder base - smaller franchisees building. MORE PEOPLE than prior years." Pipeline better than last year. Path to 7,700 by 2028. TAM expanding as competitors close. 99% franchise = capital-light compounding.
👑
Aggregators Still Growing Fast
85%+ US sales digital. DoorDash rollout complete - bigger Q4 contribution coming. Uber growing. Russell: "We deliver 1 in 3 pizzas. Not at that share on aggregators yet." 50% incrementality. Competition pricing unsustainably. Multi-year tailwind.
🚀
Operating Leverage + Cash Flow
Operating income +11.8% beats revenue growth. Free cash flow +31.8%. Incremental sales dropping to bottom line. If US comps stay 5%+ = EPS compounds 12-15%. Stock rerates to 27-30x P/E = $550-650 target.
🐻 Why DPZ Bears Have Valid Concerns
📉
Net Income DOWN Despite Revenue Beat
Net income -5.2% to $139.3M. $29.2M DPC Dash loss hit bottom line. EPS only +3% vs revenue +6%. More write-downs possible. At 24x P/E, any miss = 10-15% drop. Analysts cut targets pre-earnings.
🏥
Q4 Macro "Intensifying" + International Weak
Sandeep: "Seeing slowing across restaurant industry at start Q4. If it intensifies, could pressure full year comp." International +1.7% - way below historical. DPE had 200 store closures Q1. If Q4 misses 3% guidance = 10-15% drop.
💸
Labor + Input Cost Pressure Building
Min wage rising. Labor = biggest franchisee cost. Cheese, flour, meats volatile. 3.3% pricing to stores but costs could spike faster. If costs +5-7% but pricing limited to 3-4% = margin compression. Store openings slow.
⚠️
Stock Up 4.4% Post-Earnings But Risks Remain
$426.20 after earnings pop (+4.4%, +1.9% YTD). Market cap $14.5B at 24x P/E. Analysts cut targets: Jefferies $490→$455, Piper $477→$443. Consensus $508 = 19% upside, 20% downside to $340. Management warned Q4 "intensifying." If recession hits = 18x P/E = $306-325. One miss gives back all gains.
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
