In the ever-volatile world of stock investing, identifying companies with rising relative strength can be a game-changer for portfolios. Relative strength (RS) measures a stock’s price performance compared to the broader market, often indicating momentum and investor confidence. One stock that has recently caught the eye of investors and analysts alike for its rising relative strength is Domino’s Pizza, Inc. (NYSE: DPZ). As of early 2025, Domino’s has shown resilience and growth potential in a competitive quick-service restaurant (QSR) sector, making it a compelling case study for those seeking stocks with upward momentum. This article delves into why Domino’s Pizza stands out, examining its financials, operational strategies, market dynamics, and what investors should consider when evaluating its potential.
Understanding Relative Strength and Its Importance
Relative strength is a technical indicator that compares a stock’s price performance to a benchmark index, such as the S&P 500, over a specific period. A stock with a high RS rating—typically above 70 on a 0-100 scale—is outperforming most other stocks in the market, signaling strong investor demand and potential for further gains. For Domino’s Pizza, its recent RS performance has been notable, reflecting both its operational success and market sentiment.
Investors often use RS to identify stocks that are likely to continue their upward trajectory, especially during bull markets or periods of economic recovery. However, RS is not a standalone metric—it must be paired with fundamental analysis to ensure the stock’s price momentum is supported by solid business performance. Domino’s Pizza offers a blend of technical strength and fundamental stability, making it an intriguing option for growth-focused investors.
Domino’s Pizza: A Snapshot of the Company
Domino’s Pizza, Inc., headquartered in Ann Arbor, Michigan, is a global leader in the pizza delivery and carryout segment. Founded in 1960, the company operates through a franchise-heavy business model, with over 20,000 locations across more than 90 countries as of early 2025. Domino’s generates revenue through three primary segments: U.S. stores (primarily franchise royalties), international franchises, and its supply chain operations, which provide ingredients and equipment to franchisees.
The company’s brand is synonymous with convenience, leveraging technology to streamline ordering and delivery while maintaining a focus on value and quality. Domino’s has consistently innovated—whether through its pioneering online ordering platform, GPS delivery tracking, or partnerships with third-party delivery services like Uber Eats. These efforts have solidified its position as a market leader, even amidst competition from rivals like Pizza Hut and Papa John’s, as well as the broader rise of fast-casual dining options.
Why Domino’s Pizza Is Showing Rising Relative Strength
As of March 2025, Domino’s Pizza has demonstrated rising relative strength, with its RS rating climbing into the mid-80s on various technical analysis platforms. This upward trend can be attributed to several factors, both technical and fundamental, that have bolstered investor confidence in the stock.
1. Strong Price Performance Compared to the Market
Over the past 12 months, Domino’s stock has outperformed the S&P 500, a key benchmark for relative strength calculations. While the broader market faced headwinds from inflation concerns and geopolitical tensions in 2024, Domino’s stock gained approximately 15% year-over-year, compared to the S&P 500’s more modest 8% rise. This outperformance reflects investor optimism about Domino’s ability to navigate economic challenges while delivering consistent growth.
The stock’s 50-day and 200-day moving averages have also trended upward, with the 50-day average crossing above the 200-day average—a bullish signal known as a “golden cross.” Such technical indicators often attract momentum investors, further fueling the stock’s RS rating.
2. Resilient Financial Performance
Domino’s financials underpin its rising relative strength. In its most recent quarterly earnings report (Q4 2024), the company reported a 5% year-over-year increase in global retail sales, driven by a 3% rise in U.S. same-store sales and a 4% increase internationally. Revenue for the quarter reached $1.4 billion, up 6% from the prior year, while earnings per share (EPS) grew 8% to $4.20, beating analyst expectations by $0.15.
The company’s franchise model provides a stable revenue stream with high margins, as it collects royalties based on store sales rather than bearing the operational costs of running restaurants. In 2024, Domino’s reported an operating margin of 18%, well above the industry average for QSR companies. Additionally, its supply chain segment, which accounts for roughly 60% of revenue, ensures consistency and cost control across its franchise network, further boosting profitability.
3. Dividend Growth and Shareholder Returns
Domino’s commitment to returning value to shareholders has also contributed to its rising RS. The company pays an annual dividend of $6.04 per share, yielding approximately 1.4% as of March 2025. Over the past five years, Domino’s has increased its dividend by an average of 15% annually, earning it a reputation as a reliable dividend growth stock. Additionally, the company repurchased $200 million worth of shares in 2024, reducing its share count and boosting EPS—a move that often appeals to value and growth investors alike.
Operational Strategies Driving Domino’s Success
Several strategic initiatives have positioned Domino’s as a standout in the QSR space, contributing to its financial stability and, by extension, its rising relative strength.
1. Technology and Innovation
Domino’s has been a pioneer in leveraging technology to enhance customer experience and operational efficiency. Its digital ordering platform accounts for over 80% of U.S. sales, with features like voice ordering, app-based tracking, and loyalty rewards keeping customers engaged. In 2024, Domino’s expanded its partnership with Uber Eats, allowing customers to order through the third-party platform while still utilizing Domino’s delivery drivers—a move that broadened its reach without sacrificing control over the delivery experience.
The company also invested in AI-driven tools to optimize delivery routes and predict demand, reducing costs and improving service times. These innovations have helped Domino’s maintain a competitive edge, especially as younger consumers increasingly favor brands that offer seamless digital experiences.
2. Global Expansion
While the U.S. remains Domino’s largest market, its international growth has been a key driver of revenue. In 2024, the company opened 600 new stores globally, with significant expansion in high-growth markets like India, China, and Southeast Asia. International same-store sales growth outpaced the U.S., reflecting the untapped potential in these regions. Domino’s franchise model allows it to scale rapidly with minimal capital expenditure, as franchisees bear the cost of opening and operating new stores.
3. Value Proposition in a Cost-Conscious Market
Amid inflationary pressures, Domino’s has doubled down on its value proposition. Promotions like the “Mix & Match” deal—where customers can choose any two items for $6.99—have resonated with budget-conscious consumers. Unlike some competitors who have raised prices significantly, Domino’s has maintained affordability while introducing premium menu items like stuffed crust and artisanal pizzas to capture higher-margin sales. This balance has helped the company maintain customer loyalty and drive traffic, even during economic uncertainty.
Risks and Challenges to Consider
Despite its rising relative strength, Domino’s is not without risks. Investors should carefully weigh these challenges before making a decision.
1. Competitive Pressure
The QSR pizza segment is highly competitive, with rivals like Pizza Hut and Papa John’s vying for market share, alongside local pizzerias and fast-casual chains offering alternative dining options. While Domino’s has maintained its lead, any misstep in pricing, quality, or innovation could erode its position.
2. Macroeconomic Headwinds
Rising food and labor costs remain a concern for the QSR industry. Although Domino’s franchise model insulates it from some of these pressures, inflation could still impact consumer spending and franchisee profitability, potentially slowing growth.
3. Valuation Concerns
Domino’s stock trades at a forward price-to-earnings (P/E) ratio of 25, above the QSR industry average of 20. While its growth justifies a premium, investors should monitor whether the stock becomes overvalued, especially if market conditions shift.
Investment Outlook: Is Domino’s Pizza a Buy?
For investors seeking stocks with rising relative strength, Domino’s Pizza presents a compelling case. Its combination of technical momentum—evidenced by a strong RS rating—and fundamental strengths, such as consistent revenue growth, high margins, and a shareholder-friendly approach, makes it a standout in the QSR sector. The company’s focus on technology, global expansion, and value ensures it is well-positioned to navigate challenges and capitalize on opportunities.
However, the stock’s premium valuation and competitive risks suggest a balanced approach. Investors might consider a dollar-cost averaging strategy to mitigate potential volatility, especially given the broader economic uncertainty in 2025. For those with a long-term horizon, Domino’s offers a mix of growth and income potential, with its dividend providing a buffer against market downturns.
Conclusion
Domino’s Pizza exemplifies how a well-executed business model, paired with innovation and adaptability, can translate into stock market success. Its rising relative strength in early 2025 reflects both its operational resilience and investor confidence in its future. While risks remain, Domino’s track record and strategic vision make it a stock worth watching—and potentially owning—for those looking to capitalize on momentum in the QSR space. As always, investors should conduct their own due diligence, considering their risk tolerance and investment goals before adding Domino’s to their portfolios.
