Domino's

Methodology

Domino's franchise-heavy business model generates highly predictable earnings from royalty fees and supply chain sales, making fair value calculations remarkably reliable. The asset-light franchisor model provides consistent high-teens ROE with minimal capital requirements. Fair value works well when accounting for steady mid-to-high single-digit earnings growth from unit expansion and same-store sales.

Methodology

Domino's typically trades at PEG ratios between 2.0-3.5x, reflecting premium valuations for its exceptional franchise model, digital leadership, and international growth runway. The company's fortressing strategy and technology investments drive consistent same-store sales. PEG appears expensive but reflects sustainable competitive advantages in delivery pizza and proven execution track record.

Methodology

Domino's pays a modest dividend yielding under 1%, making PEGY nearly identical to PEG for valuation purposes. Management prioritizes strategic reinvestment and returns excess cash through share buybacks. Total return focuses primarily on earnings compounding through unit growth and operational excellence rather than dividend income.