For Domino’s, Same-Store Sales Growth Is an Essential Ingredient
For a while now, revenue growth for Domino's Pizza (NYSE: DPZ) has been pretty hard to beat. With five years of double-digit sales growth, this has easily been one of the best-performing investments to have in a portfolio. At the same time, the balance sheet continues to create concern. Domino's runs an equity deficit, making continued expansion essential to the stock's health.
Through the last five full fiscal years, annual revenue has climbed 172%, to reach $3.43 billion in fiscal 2018. In that same time frame, annual net income has risen 122.6% to $361.97 million. This wasn't lopsided growth, either: It includes strong double-digit gains in net income. On a per-share basis, earnings grew by 43.29% in 2018 alone. It's not hard to see why this stock has been on fire over the last decade, handily beating the S&P 500 annually.
With this kind of growth, how could I possibly be nervous about the stock? Well, Domino's also has some serious debt. In those same aforementioned years of growth on the income statement, it created huge liabilities on its balance sheet. These are so great now that they outweigh the gains created elsewhere.
Source Fool.com
