Domino’s Pizza, Inc. (DPZ): The Best Investment in Pizza

Papa John’s has increased its revenue over the past three years, and earnings have improved over the past two years. In the first quarter, revenue increased 7.30% and earnings improved 13.70% year over year. According to Alexa.com, the global traffic rank for papajohns.com has plunged 578 spots to 3,411. This is a more significant drop than dominos.com. This doesn’t necessarily indicate a loss of market share, however; it may simply mean that consumers are cutting back. Either way, it’s not a plus. Papa John’s doesn’t pay a dividend, but that has helped the company to keep its balance sheet healthy.

Yum! Brands has delivered consistent annual revenue and earnings improvements, and Pizza Hut has been performing well overseas. The negative press received in China regarding the quality of the chicken used at KFC led to a setback, however. It also doesn’t help that the avian flu outbreak came just a few months later, acting as an aftershock. That said, Yum! Brands offers the best margins of this group, the highest yield at 1.90%, and thanks to its product and geographic diversification, the most resiliency.

Conclusion

If you’re looking to be aggressive, Domino’s Pizza, Inc. (NYSE:DPZ) should be considered as an investment option. Growth has been consistent, and guidance is strong. The shorts are likely grabbing onto the stock due to valuation and debt concerns — Domino’s has $1.55 billion in long-term debt. If Domino’s continues to grow and increase its global market share, however, then debt shouldn’t be a hindrance (for now).

Papa John’s isn’t as big as Domino’s Pizza, Inc. (NYSE:DPZ) and its growth potential isn’t as good, but if you don’t want debt to weigh on your mind then this might be a better option for you. It’s simply lower risk/lower reward.

If you want product and geographic diversification, however, as well as resiliency in bear markets, then Yum! Brands will be your best option.

The article The Best Investment in Pizza originally appeared on Fool.com.

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