Assignment

Domino’z Pizza

Company Overview : Domino's Pizza is a standout amongst the most well known pizza chain
and is a conveyance organization for various assortments of pizza. In this day and age, Domino's
has been proportionate to quality, freshness and great administration. This junk food organization
has proceeded to develop significantly.
Tom Monaghan and his sibling James propelled Domino's in the year 1960. The one year from
now Tom purchased his sibling's offer with an exchange of Volkswagen Beetle. The
organization was then renamed Domino's Pizza.

Capacity Analysis :

I. Pollitical Issues : Political issues incorporate administrative casing work working in legal
framework which may trouble the business in different ways. In UK, there isn't all things
considered elements that may grasp domino's the same old thing. While factors like, laws on
business work, contamination and tax collection apply on the association which it ought to
pursue as indicated by tenets.

ii. Financial Factors : In the event that the region's economy is better so the GDP of the nation
will be great, it is the activity for business as the per capita pay builds individuals will spend
more cash. As indicated by domino's study, it came to realize that generally individuals spend
progressively and visit all the more frequently, amid or begin in on of months. Additionally,
ascend in swelling rate, prompts augmentation of expense of crude material which likewise leads
towards higher costs for products and the other way around

iii. Social Factors : Domino's is a multinational and it is fundamentally introduced from

America, along these lines, the association is overwhelmed by domino's western culture. There
are diverse social types of society which comprises of, privileged, working class, center high
society, and lower class. Additionally, each and every country, state has their very own social
standards, convictions, religion, values which may influence the association around the world.

1
iv. Innovative Factors : Right now, innovation is enhancing, so as preparing and warming
stoves will be of new and effective innovation and will give productive administration. Because
of these imaginative innovation there are numerous most recent methods for publicizing like
savvy, through web; telemarketing through which association can promote their items in
significantly more quickly than any time in recent memory.

SWOT Analysis:

Each association has its own qualities and shortcomings and in addition dangers and openings,
As far as domino's swot is concerned its swot examination is as under.

Strength : As of now Domino's is the market pioneer in giving extensive variety of pizzas, in a
way that there are no rival in this area. They are represented considerable authority in pizzas.
Besides Motivation level of staff is high which make the association more prosperous.They are
ISO (International Standard Organization) ensured.
They have outfitted with a lot of assets for working distinctive exercises of the association. They
are without giving home conveyance benefit.
The greater part of domino's rivals don't have eateries. As a result of the eatery, Domino's can
showcase an excessive number of various portions that other pizza chains can't.

Weakness: To the extent domino's shortcomings is concerned, domino's holding an eatery to run
is additionally the real shortcoming that it has, due to it has higher overhead expense than that of
contenders as contenders don't have an eatery to manage subsequently their overhead expense is
very lower than that of Domino's.
Because of higher overhead cost domino's charge higher costs. Clearly, Domino's isn't the
minimal effort maker. As they charge higher costs with the goal that's the reason they are
responsible for quality pizza and great administration. They are furnishing less scope of items
similarly with high costs. They are more centered around western taste rather than Eastern.

2
Opportunity : Domino's has a high potential in this manner it has various open doors like
insightful, in the event that it run over new markets then new open doors will be conceived.
Piece of the overall industry can be expanded by bringing assortment of new items. Costs can be
decreased as a result of more domino's.

Threat : As of now real danger that Domino's can confront are from contenders, as their quick
rival which is pizza hovel, is working over to open their branch hurriedly. Yet, upper hand that
domino's have over pizza cabin is their lower cost.

Porter’s Five Forces analysis of market structure:

The focused structure of an industry can be dissected utilizing Porter's five powers. This model
endeavors to break down the allure of an industry by thinking about five powers inside a market.
As indicated by Porter (1980) the probability of firms making benefits in a given industry relies
upon five variables:
1. The probability of new passage i.e. the degree to which hindrances to passage exist. The
more troublesome it is for different firms to enter a market the more probable it is that current
firms can make moderately high benefits.

2. The intensity of purchasers: The more grounded the intensity of purchasers in an industry
the more probable it is that they will have the capacity to compel down costs and decrease the
benefits of firms that give the item.
Purchaser power will be higher if: there are a couple of, enormous purchasers so everyone is
critical to the firm the purchasers can without much of a stretch change to different suppliers so
the supplier needs to give a brilliant administration at a decent cost

3. The intensity of providers: The more grounded the intensity of providers in an industry the
more troublesome it is for firms inside that area to make a benefit since providers can decide the
terms and conditions on which business is directed.
Providers will be all the more intense if: there are moderately few of them changing to another
provider is troublesome or potentially costly the provider can debilitate to purchase the current
firms so is in a solid arranging position

3
4. The level of contention : This estimates the level of rivalry between existing firms. The
higher the level of contention the more troublesome it is for existing firms to create high
benefits.
Competition will be higher if: there are a substantial number of comparative measured firms all
contending with one another for clients The expenses of leaving the business are high e.g. in
light of large amounts of venture.

5. The substitute risk : This estimates the straightforwardness with which purchasers can
change to another item that does likewise e.g. aluminum jars as opposed to glass or plastic jugs.
The simplicity of exchanging relies upon what expenses would be included and how comparative
clients see the choices to be.

Industry Fundaments :

Patterned or non-repeating : Enterprises that are repeating—that is, have more noteworthy
affectability to more extensive monetary execution—are innately more dangerous than non-
recurrent enterprises. Organizations in patterned ventures should convey bring down levels of
obligation than organizations in less-recurrent or non-repeating businesses.

Development prospects: Ventures that have almost no development have a tendency to combine
by means of mergers and acquisitions, which could possibly be great to corporate security
financial specialists. Weaker rivals in moderate development ventures may start to battle fiscally,
unfavorably
influencing their financial soundness.

Distributed industry measurements : Investigators can get a comprehension of an industry's

essentials and execution by inquiring about insights that are distributed by and accessible from
various distinctive sources, counting the rating organizations, venture banks, industry
productions, and every now and again, government organizations.

4
Competitive Position: Solid yet abating Revenue ascend by Domino’s Pizza Inc of multi year
on year , in the second from last quarter 2018 to 786 millions, was higher than the 0.55%
development in Grocery Stores industry, and 2.5% development in the Retail part. In spite of
humble Sales ascends in Retail division and Grocery Stores industry, Domino’s Pizza Inc
announced better than expected market Sales development.

DPZ Revenue Growth Rate Company Industry Sector S&P 500

Comparison

Y/Y Revenue Growth 22.11% 0.55% 2.5% 4.55%

Q/Q Revenue Growth 0.84% -25.62% -22.29% -12.72%

Y/Y Revenue Growth 31.63% 5.76% 9.47% %

Seq. Revenue Growth 4.59% 0.9% 1.25% 1.5%

Revenue 5 year Average 11.3% 10.69% 5.56% 14.48%

Growth

5
Contrasting organization's Revenue with the second quarter results, deals were higher by 0.84% .
On the yearly premise, normal yearly deals development for Dominos Pizza Inc is 11.03%, while
S and P 500's incorporating just Businesses with the second from last quarter 2018 profit, normal
yearly deals development is 14.48% in the course of recent years.

Dominos Pizza Inc indicated good multi year on year ascent of EPS in the second from last
quarter, contrasting positively with the 48.22% expansion in Grocery Stores industry, and
36.66% increment in the Retail area. Better than expected salary per share gains in Retail and
Grocery Stores industry, lifted generally showcase development to 33.99%.

Contrasting organization's EPS with the second quarter results, pay per share were higher by
9.55% . On the yearly premise, normal yearly pay per share development for Dominos Pizza Inc
is 27.8%, while S and P 500's incorporating just Businesses with the second from last quarter
2018 Results, normal yearly wage per share development is 62.14% in the course of recent years.

Profitability : (Cash Flow , Gross Margin, Operating Margin, Pre Tax Margin , Net
Margin)

Gainfulness proportions are monetary measurements utilized by investigators and financial

specialists to quantify and assess the capacity of an organization to create salary (benefit) with

6
respect to income, accounting report resources, working expenses, and investors' value amid a
particular timeframe. They indicate how well an organization uses its advantages for deliver
benefit and incentive to investors.

A higher proportion or esteem is generally looked for after by most organizations, as this
typically implies the business is performing great by creating incomes, benefits, and income. The
proportions are most helpful when they are dissected in contrast with comparative organizations
or contrasted with past periods.

1 Gross Profit Margin : Net overall revenue – looks at gross benefit to deals income. This
shows how much a business is gaining, considering the required expenses to create its
merchandise and enterprises. A high gross net revenue proportion mirrors a higher productivity
of center activities, which means it can in any case cover working costs, settled costs, profits, and
deterioration, while likewise giving net income to the business.

7
2 EBITDA Margin : EBITDA remains for Earnings Before Interest, Taxes, Depreciation, and
Amortization. It speaks to the gainfulness of an organization before considering non-working
things like premium and assessments, and additionally non-money things like devaluation and
amortization.
The advantage of examining an organization's EBITDA edge is that it is anything but difficult to
contrast it with different organizations since it rejects costs that might be unpredictable or to
some degree optional.

The drawback of EBTIDA edge is that it tends to be altogether different from net benefit and real
income age, which are better markers of organization execution. EBITDA is broadly utilized in
numerous valuation strategies.

3 Operating Profit Margin :Working net revenue – takes a gander at profit as a level of offers
before intrigue cost and wage charges are concluded. Organizations with high working overall
revenues are for the most part more very much prepared to pay for settled expenses and

8
enthusiasm on commitments, have better opportunities to survive a monetary log jam, and are
more equipped for offering lower costs than their rivals that have a lower net revenue.

4 Net Profit Margin:Net overall revenue is all that really matters. It takes a gander at an
organization's net pay and partitions it into aggregate income. It gives the last picture of how
gainful an organization is after all costs including interest and assessments have been considered.

A disadvantage of this metric is that it incorporates a great deal of "commotion, for example,
once costs and gains, which makes it harder for similarity purpose.

5 Cash Flow Margin : Income edge – communicates the connection between money streams
from working exercises and deals created by the business. It gauges the capacity of the
organization to change over deals into money.

9
The higher the level of income implies the more money accessible from deals to pay for
providers, profits, utilities, and administration obligation, and in addition to buy capital
resources. Negative income, in any case, implies that regardless of whether the business is
producing deals or benefits, it might in any case be losing cash.

6 Return on Assets :Profit for resources (ROA), as the name proposes, demonstrates the level of
net income in respect to the organization's aggregate resources. The ROA proportion particularly
uncovers how much after-assess benefit an organization creates for each one dollar of advantages
it holds. It likewise measures the benefit force of a business.
The lower the benefit per dollar of advantages, the more resource serious an organization is
viewed as. Exceptionally resource escalated organizations require enormous ventures to buy
hardware and gear with the end goal to produce pay.

7 Return on Equity : Profit for value (ROE) – communicates the level of net pay with respect to
investors' value, or the rate of profit for the cash that value financial specialists have put into the
business. The ROE proportion is one that is especially watched by stock experts and financial
specialists.
8 Return on Invested Capital :Profit for contributed capital (ROIC) is a proportion of return
produced by all suppliers of capital, including the two bondholders and investors. It is like the

10
ROE proportion, however more sweeping in its degree since it incorporates returns created from
capital provided by bondholders.

DPZ Growth rates Comparison: Investigating Dominos Pizza Inc development rates, income
developed by 22.11 % in III. Quarter 2018 from a similar quarter a year prior. Positioning at No.
14 Supermarkets industry recorded development of incomes by 0.55 % Dominos Pizza Inc's net
salary developed by 49.19 % in III. Quarter multi year on year, above organization normal,

Dominos Pizza Inc current PE on trailing year premise is above Grocery Stores industry normal.
Dominos Pizza Inc PEG proportion is at 0.51 , above Grocery Stores industry PEG normal of 0.
Organization's Price to Sales proportion is at 3.54. Markets industry's Price to Sales proportion is
at 0.21.

Leverage Ratio :

11
Obligation/capital :Capital is ascertained as aggregate obligation in addition to investors value.
This proportion demonstrates the percent of an organization's capital base that is financed with
obligation. A lower level of obligation shows bring down credit hazard.

Obligation/EBITDA:This proportion is a typical use measure. A higher proportion shows more

use and along these lines higher credit chance. Note that this proportion can be exceptionally
unstable for organizations with high income changeability, such as those in repetitive enterprises
and with high working influence (settled expenses).

FFO/obligation. A higher proportion shows more prominent capacity to pay obligation by assets
from activities.

FCF after profits/obligation :A higher proportion demonstrates that a more noteworthy

measure of obligation can be satisfied from free income after profit installments.

Free working income/obligation :Free activity money flow=Funds from tasks change in
working capital-capital consumption.

12
Coverage Ratio : Inclusion proportions measure a guarantor's capacity to meet—to "cover"—
its advantage installments. The two most regular are the EBITDA/intrigue cost and
EBIT/intrigue cost proportions.

EBITDA/intrigue cost:A higher proportion shows higher credit quality.

EBIT/intrigue cost:Since EBIT does exclude deterioration and amortization, it is viewed as a

more traditionalist proportion of intrigue inclusion.

Altman Z score : The Altman Z-score is the yield of a credit-quality test that checks a traded on
an open market producing organization's probability of chapter 11. The Altman Z-score depends
on five monetary proportions that can figure from information found on an organization's yearly
10-K report. It utilizes benefit, use, liquidity, dissolvability and movement to foresee whether an
organization has high likelihood of being bankrupt.
One can ascertain the Altman Z-score as pursues:

Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

13
Where:

A = working capital/add up to resources

B = held profit/add up to resources

C = income before intrigue and assessment/add up to resources

D = showcase estimation of value/add up to liabilities

E = deals/add up to resources

Domino's Pizza Enterprises Ltd has a Z-score of 3.98, demonstrating it is in Safe Zones. This
suggests the Z-Score is solid.

● The zones of separation were accordingly:

● At the point when Z-Score is under 1.81, it is in Distress Zones.

● At the point when Z-Score is more prominent than 2.99, it is in Safe Zones.

● At the point when Z-Score is somewhere in the range of 1.81 and 2.99, it is in Gray
Zones.

Amid the previous 13 years, Domino's Pizza Enterprises Ltd's most astounding Altman Z-Score
was 9.61. The most minimal was 4.00. What's more, the middle was 6.30.

Domino's Pizza Enterprises Ltd Annual Data:

Altman Z score of last five years :

14
Years June 2014 June 2015 June 2016 June 2017 June 2018

Altman Z 5.14 7.34 6.03 5.17 4.00

score

Calculation: Z-Score show is a precise forecaster of disappointment up to two years before

trouble. It very well may be viewed as the appraisal of the misery of modern enterprises.

Domino's Pizza Enterprises Ltd's Altman Z-Score for now is figured with this equation:

Z = 1.2 *X1 + 1.4 * X2 + 3.3 * X3 + 0.6 * X4 + 1.0 * X5

= 1.2 * 0.0219 + 1.4 * 0.1468 + 3.3 * 0.141 + 0.6 * 4.4483 + 1.0 * 0.6097
= 3.98
All numbers are in millions with the exception of per share information and proportion. All
numbers are in their local exchange's currency.

Trailing Twelve Months (TTM) ended in Jun. 2018:

Total Assets was $976.3 Mil.

Total Current Assets was $172.1 Mil.

Total Current Liabilities was $150.7 Mil.

Retained Earnings was $143.3 Mil.

Pre-Tax Income was $130.8 Mil.

Interest Expense was $-6.9 Mil.

Revenue was $595.3 Mil.

Market Cap (M) (Today) was $3,317.0 Mil.

15
Total Liabilities was $745.7 Mil.

X1 = Working Capital/Total Assets

= (Total Current Assets - Total Current Liabilities) / Total Assets

= (172.113193403 - 150.708395802) / 976.320089955

= 0.0219

X2 = Retained Earnings/Total Assets

= 143.348575712 / 976.320089955

= 0.1468

X3 = Earnings Before Interest and Taxes/Total Assets

= (Pre-Tax Income + Interest Expense)/Total Assets

= (130.791604198 + -6.85082458771) / 976.320089955

= 0.141

X4 = Market Value Equity / Book Value of Total Liabilities

= Market Cap (M) / Total Liabilities

= 3317.016 / 745.687406297

= 4.4483

X5 = Revenue / Total Assets

= 595.256371814 / 976.320089955

= 0.6097

The zones of separation were all things considered:

Misery Zones - 1.81 < Gray Zones < 2.99 - Safe Zones

16
Domino's Pizza Enterprises Ltd has a Z-score of 3.98 demonstrating it is in Safe Zones.

Explanation :

X1: The Working Capital/Total Assets (WC/TA) proportion is a proportion of the net fluid
resources of the firm with respect to the aggregate capitalization. Working capital is
characterized as the contrast between current resources and current liabilities.

Commonly, a firm encountering steady working misfortunes will have contracting current
resources in connection to add up to resources. Altman observed this one turned out to be the
most significant liquidity proportion contrasting and the present proportion and the fast
proportion. This is anyway the minimum huge of the five components.

X2: Retained Earnings/Total Assets : the RE/TA proportion estimates the use of a firm. Held
income is the record which reports the aggregate sum of reinvested profit as well as misfortunes
of a firm over as long as its can remember. Those organizations with high RE, in respect to TA,
have financed their benefits through maintenance of benefits and have not used as much
obligation.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This proportion is a
proportion of the genuine profitability of the company's benefits, free of any duty or use factors.
Since an association's definitive presence depends on the gaining intensity of its benefits, this
proportion gives off an impression of being especially fitting for studies managing corporate
disappointment. This proportion constantly beats other productivity measures, including income.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure
indicates how much the company's advantages can decrease in esteem (estimated by market
estimation of value in addition to obligation) before the liabilities surpass the benefits and the
firm winds up wiped out.

17
X5, Revenue/Total Assets (S/TA): The capital-turnover proportion is a standard money related
proportion outlining the deals producing capacity of the association's benefits.

Key Statistics

Price Oct 23, 265.82 Revenue 3.242B PE Ratio 34.08

20:00 (TTM) (TTM)

52 Week High 305.34 Revenue (Qtrly 22.11% PS Ratio 3.578

(Daily) YoY Growth) (TTM)

52 Week Low 166.74 Net Income 84.10M Profit 10.70%

(Daily) (Quarterly) Margin
(Quarterly)

Market Cap 11.06B EPS Diluted 1.95 Return on -12.12%

(Quarterly) Equity
(TTM)

Enterprise Value 14.45B EPS Diluted 65.25% Beta (5Y) 0.2242

(Qtrly YoY
Growth)

Domino's Pizza Inc is a speedy administration pizza eatery network. It is occupied with retail
offers of sustenance, gear and supplies to organization possessed and diversified Domino's Pizza
stores, and receipt of sovereignties and charges from Domino's Pizza franchisees.

Price performance 5 Years : Yields indicate the amount you are getting at the cost you pay. For
precedent, an income yield of 8% implies that for each dollar you pay, you get 8 pennies worth
of current profit. Comes back from value gratefulness just give a fractional perspective of the
profits to a financial specialist. This aggregate returns outline demonstrates the profits to a
financial specialist from both value gratefulness and profits Over the long haul, the cost and

18
income of an organization are corresponded. In the event that the two measurements are
wandering, there ought to be a valid justification why.

Refrences

1. Csimarket.com. (2018). Dominos Pizza Inc (DPZ) Profitability Comparisons, Net

Margin, Gross Margin, Tax rate, Cash Flow Margin Comparisons - CSIMarket.
[online] Available at: https://csimarket.com/stocks/Profitability.php?code=DPZ
[Accessed 25 Oct. 2018].
2. Ycharts.com. (2018). DPZ - Stock Quote and Charts for Domino's Pizza Inc. [online]
Available at: https://ycharts.com/companies/DPZ [Accessed 25 Oct. 2018].
3. Gurufocus.com. (2018). Domino's Pizza Enterprises Altman Z-Score
(OTCPK:DPZUF). [online] Available at:

19
 https://www.gurufocus.com/term/zscore/OTCPK:DPZUF/Altman%2BZ-
Score/Domino%27s+Pizza+Enterprises+Ltd [Accessed 25 Oct. 2018].
4. MaRS. (2018). Industry Analysis | Porter’s Five Forces | Competition. [online]
Available at: https://www.marsdd.com/mars-library/industry-analysis-and-
competition-using-porters-five-forces/ [Accessed 25 Oct. 2018].
5. Guinness (2018). Domino's Pizza Project. [online] Slideshare.net. Available at:
https://www.slideshare.net/DavidSorianoMcGuinness/creation-and-development-of-
a-mobile-application-for-dominos-pizza-espaa [Accessed 25 Oct. 2018].
6. UKEssays. (2018). An Analysis Of Domino’s Pizza. [online] Available at:
https://www.ukessays.com/essays/marketing/an-analysis-of-the-dominos-pizza-
company-marketing-essay.php [Accessed 25 Oct. 2018].
7. Corporate Finance Institute. (2018). Profitability Ratios - Calculate Margin, Profits,
Return on Equity (ROE). [online] Available at:
https://corporatefinanceinstitute.com/resources/knowledge/finance/profitability-
ratios/ [Accessed 25 Oct. 2018].
8. Staff, I. (2018). Altman Z-Score. [online] Investopedia. Available at:
https://www.investopedia.com/terms/a/altman.asp [Accessed 25 Oct. 2018].

20