US Foods (USFD) vs. Domino’s Pizza (DPZ) Critical Comparison

Domino’s Pizza (NYSE: DPZ) and US Foods (NYSE:USFD) are both mid-cap retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Dividends

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Domino’s Pizza pays an annual dividend of $2.20 per share and has a dividend yield of 0.9%. US Foods does not pay a dividend. Domino’s Pizza pays out 41.2% of its earnings in the form of a dividend. Domino’s Pizza has raised its dividend for 4 consecutive years.

Institutional and Insider Ownership

99.8% of US Foods shares are held by institutional investors. 4.0% of Domino’s Pizza shares are held by company insiders. Comparatively, 0.6% of US Foods shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Domino’s Pizza and US Foods’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Domino’s Pizza $2.79 billion 3.67 $277.90 million $5.34 44.57
US Foods $24.15 billion 0.31 $444.29 million $0.91 38.33

US Foods has higher revenue and earnings than Domino’s Pizza. US Foods is trading at a lower price-to-earnings ratio than Domino’s Pizza, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Domino’s Pizza and US Foods’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Domino’s Pizza 9.97% -12.02% 34.65%
US Foods 1.84% 10.70% 3.11%

Volatility & Risk

Domino’s Pizza has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, US Foods has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Domino’s Pizza and US Foods, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Domino’s Pizza 0 8 14 0 2.64
US Foods 0 4 8 0 2.67

Domino’s Pizza currently has a consensus price target of $233.76, suggesting a potential downside of 1.78%. US Foods has a consensus price target of $36.64, suggesting a potential upside of 5.04%. Given US Foods’ stronger consensus rating and higher possible upside, analysts plainly believe US Foods is more favorable than Domino’s Pizza.

Summary

Domino’s Pizza beats US Foods on 9 of the 17 factors compared between the two stocks.

Domino’s Pizza Company Profile

Domino's Pizza, Inc., through its subsidiaries, operates as a pizza delivery company in the United States and internationally. It operates through three segments: Domestic Stores, International Franchise, and Supply Chain. The company offers pizzas under the Domino's Pizza brand name through company-owned and franchised Domino's Pizza stores. As of February 20, 2018 it operated approximately 14,800 stores in approximately 85 markets. Domino's Pizza, Inc. was founded in 1960 and is headquartered in Ann Arbor, Michigan.

US Foods Company Profile

US Foods Holding Corp., through its subsidiary, US Foods, Inc., markets and distributes fresh, frozen, and dry food and non-food products to foodservice customers in the United States. Its customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. The company was formerly known as USF Holding Corp. and changed its name to US Foods Holding Corp. in February 2016. US Foods Holding Corp. is headquartered in Rosemont, Illinois.

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