Markets are rarely efficient, as most hedge fund managers and investors throughout history have proven that. If markets were efficient, no trader or investor would be able to outperform the market unless they had an enormous amount of leverage or access to illegal insider information.
However, there is a clear inefficiency in the consumer discretionary sector today, specifically in food and restaurant stocks. Investors should take a deeper look at this inefficiency today and consider closing it out for their own portfolios in 2025 because these kind of gaps typically don’t last long once the rest of the market — Wall Street — gets a hold of them.
Price movement in stocks Domino’s Pizza Company Nasdaq: DPZ Compared to other pizza chain brands e.g Papa John’s International Company NASDAQ: Pizza It will bring to investors the possibility of a mispricing, which Wall Street analysts will already be aware of in the coming months. Take a look at the performance Chipotle Mexican Grill Company New York Stock Exchange: CMG It could also provide further evidence of this mispricing opportunity in the area of affordable food chains.
Wall Street’s favorite metric has failed
When analysts and portfolio managers at major banks and hedge funds manage their positions and ideas, they typically weight the potential outcome in terms of beta. Beta is a measure that determines how volatile a stock is today compared to the S&P 500, so a higher beta (above 1.0) means the stock is more volatile than the market.
The opposite can be said for a beta of less than 1.0, which means that the stock is less volatile and safer than the broader market. With that in mind, investors can see how the various price movements in these three stocks failed the basic premise of professional money managers.
Domino’s pizza today
Domino’s Pizza
As of 10/01/2025 at 04:00 PM ET
- 52 week range
- $396.06
▼
$542.75
- Dividend yield
- 1.50%
- P/E ratio
- 24.71
- Price target
- $501.93
With a low beta of 0.90, Domino’s Pizza stock has underperformed Chipotle Mexican Grill stock over the past 12 months by as much as 27%. However, given that Chipotle has a much higher beta of 1.3, the recent declines in the S&P 500 shouldn’t be any harsher on Domino’s Pizza stock.
While Chipotle stock is trading at 85% of its 52-week high, which is considered bullish territory, Domino’s Pizza stock is down just 72% of its 52-week high, which is bearish territory for the company. It almost seems like the extreme underperformance of Papa John’s stock may have dragged down Domino’s Pizza due to the correlation, and if that’s the case, investors should be excited.
A difference maker for Domino’s Pizza stock
Of course, it’s a sell-off because neither the beta nor the fundamentals between Domino’s Pizza and Papa John’s shares suggest that Domino’s should trade this low compared to its 52-week high. There is one key difference in the stock, the financial metric, that investors should be aware of in Domino’s Pizza stock today.
This metric is the rate of return on invested capital (ROIC), which is responsible for doubling itself and creating a sort of “I wish I had bought” reaction when investors look at a stock’s long-term price chart. With a return on investment of over 61%, the Domino’s Pizza sock fits this description perfectly.
Compared to Papa John’s ROI of approximately 31%, it seems that correlational selling may not be justified at all. Recently, some on Wall Street have become aware of this inefficiency and decided to take matters into their own hands, such as those from FMR LLC, who boosted their positions in the company by 16.3% as of November 2024.
Domino’s Pizza stock forecast today
$501.93
24.76% upModerate purchase
Based on 29 analyst ratings
| High expectations | $612.00 |
|---|---|
| Average expectations | $501.93 |
| Low expectations | $412.00 |
Details of Domino’s Pizza stock forecast
This new allocation would net their position at a high of $941.9 million today, or a 6.3% ownership in the company. As another bullish gauge for investors to consider Domino’s Pizza as a potential buy in this latest pullback, there are also more clues to track.
Analysts from Loop Capital also have a buy rating on the company as of November 2024, this time boosting their ratings to a high of $559 per share to call for a net upside of 35.4% from where the stock is trading today. This bold call was born not only from the shortcomings noted above but also from the stock’s outstanding discount.
Compared to the retail sector’s average price-to-earnings (P/E) valuation of 98.4x, Domino’s Pizza makes a significant discount with its 25.4x multiple today, which is also severely compressed compared to its long-term average valuation of 35.0x.
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