Domino's PizzaDPZ

We expect revenue to grow from $5.2B in FY2026 to $6.3B in FY2031 (~4% CAGR), with EPS growing from $19.22 to $29.03 (~9% CAGR). Growth is driven by steady international store expansion and the continued shift toward digital ordering platforms. Profitability improves as the company leverages its massive supply chain and digital infrastructure over a larger global store base. EPS grows faster Operating margin expected to reach ~20% by FY2031.

Carryout market share gains drive higher domestic store density. Capturing the carryout customer allows for more stores in a single neighborhood without cannibalizing delivery sales.

Supply chain efficiency gains from procurement productivity boost margins. Higher procurement productivity and scale allow Domino's to keep food costs lower than all competitors.

International store growth compounds high margin royalty revenue streams. Opening 800 or more international stores annually adds high margin royalties with almost zero incremental capital.

International sales stagnation due to macro pressure or local competition. If international same store sales remain negative, the growth story shifts entirely to new store openings.

Third party aggregator fees erode the value proposition of delivery. If delivery fees across the industry keep rising, consumers may pull back on the frequency of pizza orders.

Labor cost inflation at the store level hurts franchisee profitability. Rising wages could slow the pace of new store openings if franchisees see lower returns on their capital.

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We use a Forward P/E approach (price-to-earnings applied to next year's earnings). It fits Domino’s because the business is a mature, highly profitable franchisor with predictable earnings streams, making net income the most reliable signal of value for long-term investors compared to more volatile revenue-based metrics.

Next year's EPS of $19.22 multiplied by a 21x multiple gives a per-share fair value of $404. A 21x multiple sits at the lower end of the large-cap restaurant peer range (McDonald's at 22x, Yum Brands at 23x), which provides a margin of safety for Domino's higher debt-to-equity profile. We use the FY2026 EPS estimate of $19.22 provided by the projection engine to remain consistent with the broader report's growth expectations.

A 5-year Discounted Cash Flow (DCF) cross-check produces a fair value of $418 — within 4% of our Forward P/E answer of $404, confirming the result. This model uses a 9.2% discount rate (based on a 0.92 beta) and assumes free cash flow grows at 6% annually before reaching a 3% terminal growth rate. The alignment between the multiple-based approach and the cash-flow-based approach suggests that the 21x multiple accurately captures the present value of Domino's future franchise royalties.

We're assuming Domino's can maintain a 21x forward price-to-earnings multiple. While the stock currently trades at 17.7x, this is a historical outlier; the business has averaged closer to 25x over the last decade, and the current discount reflects temporary macro fears rather than a decay in the underlying franchise quality.

We're assuming the company sustains its 58% Return on Invested Capital (ROIC). This exceptional efficiency is driven by the asset-light franchise model where franchisees provide the capital for store expansion while Domino's collects high-margin royalties and supply chain fees, a trend that remained stable in the Q1 FY2026 results.

We're assuming FY2026 EPS of $19.22 as the valuation base. This matches the deterministic projection engine and is supported by a 3.5% revenue growth rate, which aligns with recent quarterly trends and management’s historical ability to pass through modest food price inflation to consumers.

The biggest risk is the high leverage ratio and the company's sensitivity to rising interest rates. Given the $5.14B debt load against a negative equity base, a sustained 1% increase in interest expenses would compress the forward multiple from 21x to 17x, knocking roughly $77 off the fair value. Watch the "Interest Expense" line on the income statement relative to operating income.