3 Reasons Why Domino's Pizza Stock Could Be a Great Buy for Investors Who Think Like Warren Buffett

Core Investment Thesis - Berkshire Hathaway has purchased nearly 1.3 million shares of Domino's Pizza, indicating confidence in the company's potential for growth and profitability [2][14] Group 1: Business Understanding - Domino's Pizza is the largest pizza business globally, with over 21,000 locations, primarily operated by franchisees, which simplifies the business model [5][4] - The company's main objectives include maintaining brand awareness and ensuring franchisee profitability, with operational risks managed by third-party franchisees [6][4] Group 2: Competitive Advantage - Domino's generates a significant portion of its revenue from supply chain services, with over $650 million in supply chain revenue in fiscal Q3 2024, accounting for 60% of total revenue [7][8] - The scale of Domino's supply chain provides efficiencies and incentivizes franchisees to utilize its services, creating a competitive advantage or "moat" [9][8] - Domino's operating margin stands at 18.49%, significantly higher than its main competitor, Papa John's, which has an operating margin of 6.58% [10][9] Group 3: Shareholder Returns - Domino's pays a growing dividend and regularly repurchases shares, aligning with Warren Buffett's preference for companies that return cash to shareholders [11][12] - The average diluted shares outstanding for Domino's has decreased over the years, enhancing shareholder value as the share count declines [13][12] Group 4: Long-term Value Creation - Domino's Pizza is positioned to create long-term shareholder value due to its strong business model, competitive advantages, and commitment to returning capital to shareholders [14]