Domino’s Pizza, Inc. (DPZ) Is Too Expensive: Buy These Alternatives Instead!

However, I think the most attractive way to play the Pizza business right now is through Yum! Brands, which in addition to its almost 14,000 Pizza Hut restaurants, also gives investors diversification with its KFC and Taco Bell brands.  Not only is Yum the most attractively valued of the three at 19 times earnings and 16.6% forward growth, they are also the most shareholder friendly.  Yum pays a 2.05% yield, and has increased its dividend each and every year since it began paying dividends in 2004.  There is also a nice share buyback program as well, and the total number of outstanding shares has dropped from 491 million in 2008 to 452 million today.

So, while I truly like and believe in Domino’s as a company, it simply doesn’t make sense as an investment at current levels.  Not only is it more expensive than the other two companies mentioned here, it includes the added risk of being an undiversified company, unlike Yum, a fact that typically warrants a cheaper valuation.

The article This Pizza Company Is Too Expensive: Buy These Alternatives Instead! originally appeared on Fool.com and is written by Matthew Frankel.

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