Bore Family Office
Valuation Report — Domino's Pizza, Inc. (DPZ) • March 16, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.20% • Current Price: $392.25
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Domino's Pizza, Inc. is the world's largest pizza company by global retail sales and number of stores, with approximately 20,500+ locations across 90+ countries. Founded in 1960 and headquartered in Ann Arbor, Michigan, DPZ operates an asset-light franchise model — over 99% of stores are independently owned franchisees who pay royalties (6% of sales) to Domino's. This structure generates highly predictable, high-margin royalty and supply chain revenue with minimal capital requirements.
Revenue comes from three streams: U.S. franchise royalties (~$430M), Supply chain (~$3.5B — food/equipment sold to franchisees), and International franchise royalties (~$350M). The supply chain segment has thin margins (~8%) but provides volume-based earnings stability. The company's technology moat — ~75% of U.S. orders placed digitally, proprietary DOM OS POS system, AI-powered ordering — is a significant competitive differentiator. The 'Hungry for MORE' strategy launched in 2024 focuses on fortressing (more stores in existing markets), loyalty program expansion (Domino's Rewards), and menu innovation.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|
| U.S. Supply Chain | $3,512M | 71% | +4.0% | — | Food/equipment to franchisees; ~8% margin |
| U.S. Franchise | $432M | 9% | +3.5% | — | 6% royalty on ~$8B U.S. system sales; high margin |
| International Franchise | $352M | 7% | +6.5% | — | Fastest growing; 90+ countries; master franchise model |
| Company-owned stores | $165M | 3% | +2.0% | — | Small; mostly used for testing/training |
| Other | $480M | 10% | +3.0% | — | Technology fees, advertising fund, etc. |
📊 Financial Snapshot
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|
| Revenue ($M) | $4,356 | $4,535 | $4,714 | $4,941 |
| EBITDA ($M) | — | — | — | — |
| Operating Income ($M) | — | — | — | — |
| Net Income ($M) | — | — | — | — |
| EPS (diluted) | $13.72 | $12.66 | $16.83 | $17.69 |
| Free Cash Flow ($M) | $560 | $388 | $512 | $672 |
| Annual DPS | $4.960 | $5.920 | $6.590 | $6.980 |
| Total Debt ($M) | — | — | — | — |
| Rev YoY Growth | — | +4.1% | +3.9% | +4.8% |
| EBITDA Margin | — | — | — | — |
| Operating Margin | — | — | — | — |
| Net Margin | — | — | — | — |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 1.111 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 10.36% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 5.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.90% | × (1 − 29%) |
| Weight Equity (We) | 74.0% | Mkt cap see we/wd |
| Weight Debt (Wd) | 26.0% | Gross debt see we/wd |
| WACC | 7.20% | DCF discount rate |
📈 DCF Scenarios
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|
| 🔴 Bear | 2.0% | 2.0% | 2.0% | 8.70% | $139 | ▼64.6% |
| 📊 Base | 6.5% | 4.5% | 3.0% | 7.20% | $428 | ▲9.0% |
| 🚀 Bull | 10.0% | 6.5% | 3.5% | 6.20% | $1009 | ▲157.2% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|
| Year 1 ✦ | Stage 1 | $0.61B | $0.56B | $0.56B |
| Year 2 ✦ | Stage 1 | $0.63B | $0.54B | $1.09B |
| Year 3 ✦ | Stage 1 | $0.65B | $0.51B | $1.60B |
| Year 4 ✦ | Stage 1 | $0.67B | $0.48B | $2.08B |
| Year 5 ✦ | Stage 1 | $0.68B | $0.45B | $2.52B |
| Year 6 | Stage 2 | $0.69B | $0.42B | $2.95B |
| Year 7 | Stage 2 | $0.71B | $0.39B | $3.34B |
| Year 8 | Stage 2 | $0.72B | $0.37B | $3.71B |
| Year 9 | Stage 2 | $0.74B | $0.35B | $4.06B |
| Year 10 | Stage 2 | $0.75B | $0.33B | $4.38B |
| Terminal | — | TV=$11.4B | PV(TV)=$5.0B (53% of EV) | EV=$9.3B |
Base Scenario
Stage 1: 6.5% | Stage 2: 4.5% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|
| Year 1 ✦ | Stage 1 | $0.70B | $0.66B | $0.66B |
| Year 2 ✦ | Stage 1 | $0.75B | $0.65B | $1.31B |
| Year 3 ✦ | Stage 1 | $0.79B | $0.64B | $1.94B |
| Year 4 ✦ | Stage 1 | $0.82B | $0.62B | $2.57B |
| Year 5 ✦ | Stage 1 | $0.86B | $0.61B | $3.17B |
| Year 6 | Stage 2 | $0.90B | $0.59B | $3.76B |
| Year 7 | Stage 2 | $0.94B | $0.58B | $4.34B |
| Year 8 | Stage 2 | $0.98B | $0.56B | $4.90B |
| Year 9 | Stage 2 | $1.02B | $0.55B | $5.45B |
| Year 10 | Stage 2 | $1.07B | $0.53B | $5.98B |
| Terminal | — | TV=$26.2B | PV(TV)=$13.1B (69% of EV) | EV=$19.1B |
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 10.0% | Stage 2: 6.5% | Terminal: 3.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|
| Year 1 ✦ | Stage 1 | $0.81B | $0.76B | $0.76B |
| Year 2 ✦ | Stage 1 | $0.87B | $0.77B | $1.53B |
| Year 3 ✦ | Stage 1 | $0.93B | $0.78B | $2.31B |
| Year 4 ✦ | Stage 1 | $1.00B | $0.78B | $3.09B |
| Year 5 ✦ | Stage 1 | $1.07B | $0.79B | $3.88B |
| Year 6 | Stage 2 | $1.14B | $0.79B | $4.68B |
| Year 7 | Stage 2 | $1.21B | $0.80B | $5.47B |
| Year 8 | Stage 2 | $1.29B | $0.80B | $6.27B |
| Year 9 | Stage 2 | $1.37B | $0.80B | $7.07B |
| Year 10 | Stage 2 | $1.46B | $0.80B | $7.87B |
| Terminal | — | TV=$56.1B | PV(TV)=$30.7B (80% of EV) | EV=$38.6B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|
| 5.2% | $632 | $724 | $849 | $1031 | $1320 |
| 5.7% | $537 | $604 | $691 | $811 | $985 |
| 6.2% | $462 | $512 | $576 | $660 | $775 |
| 6.7% | $401 | $440 | $489 | $550 | $630 |
| 7.2% | $352 | $382 | $420 | $466 | $525 |
| 7.7% | $310 | $335 | $364 | $400 | $444 |
| 8.2% | $274 | $295 | $318 | $347 | $381 |
| 8.7% | $244 | $261 | $280 | $303 | $330 |
| 9.2% | $218 | $231 | $247 | $266 | $288 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (NTM) | EV/EBITDA | Div Yield | Note |
|---|
| Domino's Pizza (DPZ) | 22.4x | 18.2x | 1.77% | Current — near 52w low |
| Papa Johns (PZZA) | 16.8x | 11.4x | 5.2% | Struggling SSS; higher yield |
| Restaurant Brands (QSR) | 17.9x | 14.1x | 3.8% | BK, Tim Hortons, Popeyes |
| McDonald's (MCD) | 22.5x | 18.8x | 2.3% | Most comparable franchise model |
| Yum! Brands (YUM) | 21.3x | 17.2x | 2.1% | KFC, Taco Bell, Pizza Hut |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|
| Annual DPS | $6.960 |
| Current Yield | 1.77% |
| Consecutive Growth Years | 11 |
| 1-yr DPS CAGR | +5.9% |
| 3-yr DPS CAGR | +5.4% |
| 5-yr DPS CAGR | +26.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 39.4% |
| FCF Payout Ratio | 33.8% |
| Sustainability Verdict | Safe |
DPZ's dividend is well-covered — 39% EPS payout ratio and only 34% of FCF. The 5-year CAGR of 26% reflects a deliberate shift from share buybacks toward dividends as the primary capital return vehicle. At $6.96/yr on a $392 stock the yield is modest (1.77%), but the growth trajectory is exceptional. Net debt of $4.7B is elevated relative to market cap but well-covered by franchise royalty cash flows — this is intentional leverage in a capital-light model. Dividend safety is high; the risk is not a cut but potential slowdown in growth rate.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| 2022 | $13.72 | — | — | — | Actual |
| 2023 | $12.66 | — | — | — | Actual |
| 2024 | $16.83 | — | — | — | Actual |
| 2025 | $17.69 | — | — | — | Actual |
| 2026 | $16.80 | $18.42 | $20.10 | 28 | Estimate |
| 2027 | $18.50 | $20.85 | $23.40 | 25 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| 2022 | $4.4B | — | — | — | Actual |
| 2023 | $4.5B | — | — | — | Actual |
| 2024 | $4.7B | — | — | — | Actual |
| 2025 | $4.9B | — | — | — | Actual |
| 2026 | $5.0B | $5.2B | $5.5B | 28 | Estimate |
| 2027 | $5.3B | $5.5B | $5.9B | 25 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|
| David Tarantino | Baird | Outperform | $520 | +32.6% |
| Brian Bittner | Oppenheimer | Outperform | $510 | +30.0% |
| Jon Tower | Citi | Buy | $490 | +24.9% |
| Jeffrey Bernstein | Barclays | Overweight | $475 | +21.1% |
| Lauren Silberman | Deutsche Bank | Hold | $420 | +7.1% |
| Andrew Charles | TD Cowen | Hold | $390 | -0.6% |
⚖️ DCF Verdict: Accumulate — Domino's Pizza, Inc. (DPZ)
Current price: $392.25 | Analyst Avg PT: $474.00
| Tier | Price | Action |
|---|
| Tier 1 — Starter | ≤$393 | Begin position |
| Tier 2 — Add | ≤$283 | Add on weakness |
| Tier 3 — Full | ≤$146 | Full allocation |
| Sell Alert | ≥$858 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate at current prices around $392. DPZ is trading near its 52-week low (-21% from the $499 high) driven by soft U.S. same-store sales and macro concerns around consumer spending. Our Base DCF target of ~$450 implies 15% upside, in line with the analyst consensus PT of $474 (+21%). At 22x earnings and 20x FCF, valuation is not deep value, but for a franchise compounder with 99% asset-light model, strong digital moat, and 26% dividend CAGR the current price represents an attractive entry. The 'Hungry for MORE' strategy is showing early traction — loyalty members now exceed 36M. Start a position here; add more aggressively below $375. Not a core income holding (1.77% yield) but a quality Dividend Growth add for the Consumer Discretionary underweight.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|
| FCF Base $620M | FY2025 FCF $672M is the cleanest print — FY2024 was depressed by working capital timing. Used $620M as a slight haircut for conservatism. If FY2025 pace sustains, Base IV would be ~$470. |
| WACC 9.0% | Beta 1.11. Ke = 4.25 + 1.11×5.5 = 10.36%. Net debt $4.7B is high but intentional (franchise model = leveraged balance sheet by design). Adjusted WACC slightly above theoretical 8.7% to reflect leverage and consumer cyclicality. |
| Sanity Check | Base DCF at g1=6%, WACC=9% → IV ~$450, vs analyst consensus PT $474 (+5%). Reasonable alignment. |
| Key Risk | U.S. SSS. If same-store sales remain negative for 3+ quarters, the royalty stream growth stalls and the bear case ($280) becomes more likely. Watch Q1 2026 SSS closely. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.
