252.0 -3.17 (-1.26%) Sell

Are you evaluating investing in DPZ? Avoid as it has destroyed investor wealth

13 min read

DOMINOS PIZZA INC has destroyed investor wealth today. It lost -1.26% to close at 252.0. It's recent 5 day performance has been -1.2%, -3.03%, +0.14%, -3.74% and -0.35%.

[Themes containing DPZ]

DPZ showed a strong down trend over the last 3 months. During this period DPZ lost -11.65% and saw a maximum drawdown of -14.52%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in DPZ till volatility reduces and a clear trend emerges.


DPZ has been underperforming the SP500 index in recent time, after having outperformed till 30 Aug, 2018. Over the last 2 years 11 months and 7 days, DPZ outperformed the SP500 index on 58% days.

DPZ returned losses on 53% days in the last three months. During this time, it delivered on average -0.18% per day. It delivered it's worst daily return of -4.88%, during this period, on Tuesday, 16 Oct, 2018. There was initially a bearish trend during this period which started on 13 Sep, 2018 and went on till 17 Sep, 2018. The trend delivered -3.77% losses to investors. This was followed by a bullish trend that started on 20 Nov, 2018 and ended on 29 Nov, 2018. This bullish trend delivered +10.65% to investors.

DPZ had 8 profitable and 4 loss making months over the last year. During the last year, number of profitable months of DPZ and SP500 index were the same. DPZ significantly outperformed SP500 index in Jan 2018, when it returned +16.0% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. DPZ and SP500 index, both had periods of 6 consecutive profitable months.

My old father used to have a saying: If you make a bad bargain, hug it all the tighter.
-- Abraham Lincoln

DPZ is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in DPZ's volatility from 12 Sep, 2018 to 20 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that DPZ has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

SP500 index has more chance of extreme outcomes than DPZ. Therefore, SP500 must receive a lower allocation than DPZ in your portfolio. SP500 index usually has shorter drawdown period than DPZ.

Based on your interest in DPZ you may find it interesting to know that HQY is a small cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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