It’s been below its previous high for longer than investors would have liked.
On Dec. 31, 2021, shares of Domino’s Pizza (DPZ 2.08%) closed at an all-time high of $564.33 per share. And investors were undoubtedly thrilled. After all, anyone who invested $10,000 just five years earlier had seen the value climb to over $35,000 during this time.
Unfortunately, Domino’s Pizza stock hasn’t performed as well for investors since that all-time high on the final day of 2021. Since then, shares have dropped by about 20% — not something one wishes to see after patiently holding for about 3.5 years.
Image source: Getty Images.
Domino’s has only grown at a modest pace in recent years, which is certainly contributing to its underwhelming stock performance. Revenue in 2024 was only 8% higher from revenue in 2021. And its earnings per share (EPS) of $16.69 in 2024 was only up 23% from EPS of $13.54 in 2021.
Companies that only post single-digit growth numbers often fail to outperform the S&P 500 over the long term. And that’s what’s happened with Domino’s Pizza stock, considering the S&P 500 is up more than 30% since Domino’s hit its all-time high.
Can Domino’s stock do better from here?
Domino’s Pizza needs better growth for its stock to perform better. And being the largest pizza chain in the world already, this could be challenging. Management only expects single-digit top-line growth for the foreseeable future. But with share repurchases, it could push its EPS growth to about 10% annually.
This still might not be enough growth on the bottom line to outperform the S&P 500 over the long term. That said, it could be enough growth to allow the stock to rise in coming years, albeit at a modest pace.
Therefore, while it may not be a market beater, investors can be encouraged that Domino’s Pizza could reach a new all-time high within the next few years.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino’s Pizza. The Motley Fool has a disclosure policy.
