Domino’s Pizza Share Price Falters despite Expansion Plans

By ,

Domino’s Pizza Enterprises Ltd [ASX:DMP] has, at time of writing, fallen back to $42.90 a share at a loss of 4.37%.

While the company has agreed it was a disappointing FY19, Domino’s currently has big plans to double its store network throughout Europe and Asia by 2028.

Why be the anchovy when you can be the cheese?

The pizza chain yesterday revealed their first quarter results for the US market, reporting higher than expected earnings but slowed sales growth in expansion areas, most notably within the European market.

Overall, it reported revenue of $836 million — just shy of the expected $849.6 million result.

Some analysts have blamed Domino’s aggressive expansion tactics for the shortfall, saying that their desire to compete so aggressively with rivals like Pizza Hut has led to ‘cannibalization’ in the States, hurting domestic sales.

Domino’s has blamed ‘third-party aggregators’ like Uber Eats for the added pressure on domestic stores.

In any event, this has not stopped the company from ‘aggressively’ perusing this tactic elsewhere, with this month’s latest announcement that the company has formally agreed to launch in Denmark.

Should you take a slice of the Domino’s pie?

Even with the very real concerns surrounding weakness in the European market (and the possible shortfall of expectations for FY19), it’s hard not to think that investors have hit the panic button a little too early.

Despite their revised EBIT guidance range in February, Domino’s were still able to deliver a stronger than expected quarterly result. And whether you agree with their outlook, the company is firmly set to expand their network, with the next phase to introduce stores in Japan.

Morgan Stanley and Goldman Sachs rate the company as a buy, most likely as a result of these expansion plans. They suggest, with patience, Domino’s could be a very profitable long-term investment.


Ryan Clarkson-Ledward
For Money Morning

PS: If this has piqued your interest, then you can check out our free report from Sam Volkering, where he details what he believes are his next four big potential winners. To check it out, download for free today.


About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor…

Should You Buy Domino’s Pizza at This Price?

In what could be a bit of a respite for the embattled company and downtrodden investors, the share price looks like it could be on its way back up. This morning, Domino’s share price has improved by 67 cents or 1.59%, to trade at $42.75 — for a total improvement of 3.76% over the past 12 months.

Why Domino’s Share Price Fell 7.76% On Strong Results

The share price fell by $3.56 this morning to $42.34 on the back of their half yearly results. It seems investors on the ASX have come to expect more from companies these days, for even posting positive revenue and earnings growth won’t cut it anymore.

Domino’s Share Price Tumbles on Further Scrutiny by Fairwork

Domino’s Pizza Enterprises Limited [ASX:DMP] is taking some heat along with its share price, after Fairwork’s investigation found that the franchise continues to have issues with workplace compliance.

Boring, Cheap Challenger Beats Domino’s Exciting Growth Story

Take Domino’s Pizza Enterprises Ltd [ASX:DMP] as an example. It’s a pizza business like any other. But it’s the way that Domino’s delivers and markets itself that warrants its high share price.