Domino’s Pizza Inc. (NYSE: DPZ) has gone above and beyond what we would have ever guessed.  This was back under $20 when we started touting it as an extreme value stock.  The company was recovering from a stagnant model and it was regaining footing on its leverage from after it announced that huge one-time dividend.  The company paid out its value in cash and took on debt.  Now shares are even higher yet again after beating Wall Street analyst estimates when it last reported earnings.

Shares are up 14% at $38.36, well above the prior 52-week high of $35.30.  Here is the thing to ask: Can the run continue at this valuation?  The 52-week low is $15.80.  How many pizza stocks run 150% from their 52-week lows?  Not many.

Let’s go ahead and ratchet up the $1.90 EPS target from Thomson Reuters to the highest estimate out there of $2.00 per share.  Even there, this trades at more than 19-times forward earnings expectations.

We knew this one was well positioned and that it was going to ramp higher.  But almost $40 now from under $20? 

Still, where we may be really off base is that Domino’s has a market cap of only $2.23 billion according to Yahoo! Finance.  Our caveat was that the company might begin to pay down its debt faster than some expect.  If that comes about, the Domino’s could run even more. 

The company is expected to generate more than $1.7 billion in sales for all of 2012.  If the pizza and food delivery player keeps diversifying its food offerings there may be a chance that we were just far too conservative.  We are usually very conservative in stock valuations, but this one feels embarrassing.

JON C. OGG

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