Domino’s Sales Miss the Mark as Stock Chart Turns Bearish

Domino’s Pizza’s stock price (NYSE: DPZ) traded 4% lower on Tuesday morning, after posting mixed results compared to Wall Street expectations.

Domino’s (DPZ) reported earnings per share of $1.95 and total revenue of $786 million, compared to analyst estimates of $1.75 and $800 million. Domestic comparable sales growth was 6.3% versus estimates of 6.5%, with international sales edging higher.

Yet CEO Ritch Allison said, “Our domestic business executed at high levels. And our global business, driven by strong retail sales growth, continued its strong momentum.”

Our view is that Domino’s has a PE ratio of 37, which far exceeds the restaurant group as a whole. For comparison, the Dynamic Food and Beverage Fund (PBJ) has a PE ratio around 6.

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In analyzing the market cycles for DPZ, it appears that the stock is in the declining phase of its current cycle.

As such, we expect more downside risk with a target of $250 by November, and additional risk into next year.

Domino’s Pizza (DPZ) Stock Chart with Weekly Bars

dominos pizza stock forecast investing outlook dpz_october 15

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.

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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.