The Razor's Edge #2: Domino's Pizza And The Short Delivery

This week’s The Razor’s Edge looks at Domino’s Pizza (DPZ). You might be aware of the company’s turnaround in the 2010s, reinvigorating their brand and delivering steady and impressive stock market returns. You might also be aware that the company has been a target of short sellers over the back half of the decade, as they scaled to high multiples and a more levered balance sheet. And, if you’re following DPZ actively, you may have seen the stock sell off after missing its Q3 earnings numbers, and then rebound after CEO Ritch Allison’s commentary around the unsustainability of 3rd party order aggregators. We discuss Domino’s rise and whether it’s now poised for a fall. The comps have slowed and the stock has followed, flat for the last 15 months or so. Does that portend a change in direction? Topics Covered: 2:30 minute mark – What happened in the Q3 report with the miss but then positive returns? 6::30 – the food aggregators excuse? 8:30 – the simple Domino’s bull thesis 12:00 – The missed tech play for Domino’s and the changing economics around delivery 15:00 – How do the food aggregators change the game 17:30 – Domino’s temporary argument 19:00 – The fading Papa John’s tailwind 24:00 – Domino’s remedies to counter these headwinds 28:45 – The buyback problem 32:00 – Why Domino’s and not other related plays? 36:00 – The variety on the market now and the pricing tailwinds 43:00 – Gaming out the short thesis 49:00 – The short for boring shorts? 57:30 – The international angle 1:02:00 – The food aggregators aren’t going away