Why Did Domino’s Pizza Enterprise’s Share Price Fall Today?

What Happened to the Domino’s Share Price?

Domino’s Pizza Enterprises [ASX:DMP] operates retail food outlets and a franchise service. DMP holds the master franchise rights for the Domino’s brand in Australia, New Zealand, France, Belgium and the Netherlands.

The company has 970 stores across five countries.

The share price closed 2.77% lower on Thursday.

Why Did This Happen to Domino’s Shares?

Earlier in the week Domino’s released its full financial year performance.

Domino’s substantially bested all of last year’s key figures and even surpassed its own 2015 financial year estimates.

Before the market opened, DMP announced a 40% increase in net profit to $64 million for the 2015 financial year.

Revenue grew 19.3% to $702.4 million, beating the company’s own guidance. Store sales rose 8.6%. And Australian sales increased 11.3% compared to last financial year.
Margins are strong around 14%.

In additional, the final year dividend comes to 27.2 cents, bringing the full year dividend to 51.8 cents, up 43% on last year’s 36 full year dividend.

Overall, Domino’s shares are up 62% for this year.

What Now for Domino’s?

On the day of the announcements, DMP’s shares fell 7.65% at the open.

And rather than recover, the stock has traded down again. Today’s fall is surprising.

During the 2015 financial year Domino’s opened 54 new stores throughout Europe, which the chief executive Don Meij said is a ‘new full-year record’ for the company. And shortly DMP will open their 400th store in Japan, with another 200 stores in various countries to follow for this financial year.

Furthermore, DMP bosses reckon net profit will grow another 20% for the 2016 financial year.

Not helping market sentiment is the share price target of $32.50 per share from UBS and the $41 price target from Deutsche Bank. Don’t let these price guides cloud your judgement over this stock. In fact, the price targets aren’t even useful information.

Domino’s is solid company, with large profit margins and is still expanding the business.

The growth story for DMP isn’t over yet.

Shae Smith
Editor, Money Weekend

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Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Fat Tail Investment Research eight years ago, Shae has worked across a number of publications, such as Australian Small-Cap Investigator, Gold Stock Trader and Microcap Trader. She’s spent the past two years however, honing her macro analysis skills alongside Jim Rickards, showing Australians how to invest and profit form global macro trends.

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

Money Morning Australia