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DPZ, strong 4Q sales
Current, target price USD364, 484 (+33%)
Last, next 12-months cashflow +USD 464, 509 million

March 20th, 2021
1 minute read

Sales
  • Sales increased by a seasonal 40% in the fourth quarter to USD 1.36 billion, which is 7% ahead of our forecast.
  • This is after a 5% growth in the third quarter, bringing quarterly average growth to 7%.
  • We assume average growth of 3% in this next 12 months, bringing sales to USD 1.45 billion by the fourth quarter of 2021.

Cashflow
  • Cashflow was higher at USD 185 million in the fourth quarter, up from USD 141 million in the third quarter.
  • This brings the quarterly average cashflow to USD 116 million.
  • We use the latest quarter USD 38 million investment spending which with higher sales gives a higher average quarterly free Cashflow of USD 127 million in this next 12 months.

Strong 4Q sales, record cashflow, expecting higher cashflow next 12 months, higher target price..,

Balance sheet
  • The balance sheet net leverage of cash minus total liabilities was flat, -USD 4.7 billion in the fourth quarter from -USD 4.5 billion in the third quarter, -USD 4.6 billion a year ago.
  • With our forecast higher cashflow & a dividend payout of USD 252 million..,
  • ..,the net cash will be similar at -USD 4.4 billion in 12 months time.

Profit
  • Net profit was at USD 152 million in the fourth quarter up from USD 99 million in the third quarter.
  • The cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was lower at 86%.
  • We use the same 86% costs to predict a higher next 12 months profit, USD 505 million.

Value
  • DPZ has paid out capita of USD 1.65 billion in the last six years.
  • At the current market value of USD 14.3 billion, it’s 8.7X capital paid, 3X sales, 4X assets, with negative equity & a yield of 1.8%.
  • Our free cashflow forecast is USD 509 million. At 1.6% with a 0.6X adjustment, gives a higher target price, USD 484.