Is There Value in Domino’s Pizza, Inc. (DPZ), Papa John’s Int’l, Inc. (PZZA) and Buffalo Wild Wings (BWLD)?

Papa John’s Int’l, Inc. (NASDAQ:PZZA) is slightly less expensive than Domino’s, and given its nicer balance sheet it seems like the obvious choice. The growth prospects of both companies are similar with both focusing on international markets. Domino’s Pizza, Inc. (NYSE:DPZ) has a first-mover advantage in some countries, but Papa John’s Int’l, Inc. (NASDAQ:PZZA) isn’t too far behind.

Papa John’s Int’l, Inc. (NASDAQ:PZZA) is still expensive, though, and the price is higher than the growth prospects warrant. It seems that there’s isn’t any value in the pizza business, or at least in these two major companies.

Fast growth, delicious wings

Buffalo Wild Wings (NASDAQ:BWLD) is one of the faster growing chains out there, with revenue nearly doubling since 2009 to $1.04 billion. The company is using most of its cash flow to expand rapidly, and to the company’s credit it isn’t financing this growth with debt. Capital expenditures have been increasing about as fast as revenue growth as new stores are opened, and this seems likely to continue.

Because the company is in a rapid growth phase the EPS is probably the most relevant value to look at. The company is currently trading at 32 times earnings, higher than both Domino’s and Papa John’s Int’l, Inc. (NASDAQ:PZZA).

It’s hard to pay 32 times earnings for any company, especially a restaurant chain. Growth should be solid in the coming years, with analysts expecting 18% annual earnings growth, but with the amount of competition in the casual dining space I just can’t imagine paying this high of a price. There’s nothing really special about Buffalo Wild Wings (NASDAQ:BWLD). It’s a sports bar with wings, burgers, and beer. It competes with plenty of local and regional restaurant which all do essentially the same thing. Margins have declined in the past few years, with a gross margin of 24.2% and an operating margin of 7.9% in 2012. I just don’t see what people are excited about here.

The bottom line

Pizza and wings stocks have appreciated by enormous amounts over the past three years, and they seem significantly overvalued after that rise. Each company has the capability of strong growth, but the price is too high relative to that growth to consider the stocks. Buying a Domino’s Pizza, Inc. (NYSE:DPZ) may be a value, but the stock sure isn’t.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings (NASDAQ:BWLD). The Motley Fool owns shares of Buffalo Wild Wings (NASDAQ:BWLD) and Papa John’s Int’l, Inc. (NASDAQ:PZZA).

The article Is There Value in Pizza and Wings? originally appeared on Fool.com.

Timothy is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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