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Domino's or Papa John's: Which Stock Should You Pick Now?

Domino's Pizza, Inc.DPZ and Papa John's International Inc. PZZA reign over the pizza segment of the quick service restaurant space with solid market caps of $6.7 billion and $2.1 billion, respectively. So which one should you pick for your portfolio?

Let’s catch a glimpse at the key stats from both the companies to determine the answer.

Domino's Pizza, Inc.

Headquartered in Ann Arbor, MI, Domino’s Pizza, through its subsidiaries, operates 12,500+ locations across more than 80 markets. The company sells and delivers pizzas under the Domino’s Pizza brand..

Domino’s Pizza has a beta of 0.59, which indicates that the returns on the stock will be less volatile than the market. The company’s EPS is projected to grow 19.91% year over year for the current quarter and 18.52% for the current year.

Over the past year, Domino’s Pizza gained 32.76% value. 

Over the last 60 days, there have been four upward revisions for Domino’s Pizza, bringing the current EPS estimate to 97 cents. For the current year, eight analysts revised their estimates upwards in the same time frame with EPS expectations for the year pegged at $4.18.

It’s important to note that Domino’s Pizza reported a positive EPS surprise of 1.77% in the fourth quarter, mainly on the back of year-over-year revenue growth.

Domino’s ranks as the second-largest pizza chain in the world. The company is the market leader in the delivery segment in the U.S. and holds the second place in the carry-out segment. The company’s solid digital ordering system, focus on re-imaging, prudent expansion in the emerging markets and other sales initiatives are encouraging and would help the company to attract customers.

The company holds a Zacks Rank #2 (Buy).

Papa John's International Inc.

Headquartered in Louisville, KY, Papa John’s began its operations in 1984. This company, through its five reportable segments, operates and franchises pizza delivery and carryout restaurants in the globally. As of Dec 27, 2015, it operated 4,893 Papa John’s outlets, including 707 company-owned and 4,186 franchised restaurants across the U.S. and 39 countries.

Papa John’s has a beta of 0.25, which indicates that the returns on the stock will be less volatile than the market. The company’s EPS is projected to record year-over-year growth of 15.15% in the current quarter and 12.76% in the current year.

Over the past year, however, Papa John’s has lost 7.61% value. 

Estimates for the current quarter as well as the current year have remained stable over the past few months. 

It’s important to note that Papa John’s reported a positive EPS surprise of 8.77% in the fourth quarter, mainly on the back of better expenses.

Unlike Domino’s, Papa John’s’ top-line growth has been hurt in the past few quarters mainly due to the strengthening dollar.

The company carries a Zacks Rank #3 (Hold).

Bottom Line

Based on the financial statistics provided above, Domino’s Pizza and Papa John’s are on similar financial turf though the former is expected to see more positive growth.

Taking into account the Zacks Ranks as well as the financials of both the companies, Domino’s Pizza appears to be the better choice for your portfolio right now. Investors interested in this sector keep an eye out for Papa John’s as well since it commands a strong presence in the industry.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
 
PAPA JOHNS INTL (PZZA): Free Stock Analysis Report
 
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