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DPZ vs YUM
I am a very casual trader/investor. Therefore, I only take a look at quarterly and annual reports occasionally and try to figure out which stocks to pick. I have been holding Domino’s (DPZ) for a while now (I wrote a previous article a year ago evaluating DPZ). The current conditions with COVID further helped the stock get to new highs.
I am a customer and investor in DPZ, it’s been a major stock in my small portfolio. As a customer I loved the promotion giving points for sending pizza pictures (you could then redeem points for pizzas!).
On the other hand, I have not eaten in pizza hut since I was a kid (probably around 20 years ago). I am also not going to KFCs or Taco Bells. But I wanted to take a look at the numbers, and who knows, maybe it will make me want to try these chains.
At a high level, DPZ has a $14 billion valuation, PE ratio (price over earnings) is a about 35, which signals some company growth, Price/Sales is 4.15. Meanwhile, YUM is trading at $25 billion, has P/E of 23.5 (less growth), and Price/Sales is 4.7.
In other words, while DPZ is more expensive in terms of earnings, it is roughly equivalent when looking at sales. Let’s try to find out why and pick the best stock.
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