Investor unhappiness with the performance of Domino’s Pizza returned to the ASX yesterday when the company missed sales and profit guidance and saw the shares lose more than 12% of their value at one stage.
Back to earth for one time high flying fast food giant, Domino’s Pizza as profit growth slowed sharply, a new menu in japan was botched and the company trimmed its sales growth forecasts for Australia and NZ.
What is the current state of play with Domino’s Pizza Enterprises ((DMP))? Is it undervalued? The stock was sold off in the wake of the FY17 as technical problems affected its digital roll-out and earnings forecasts were missed.
Morgans reviews assumptions ahead of the results on August 21. Revenue growth of 12% and operating earnings (EBITDA) growth of 10% are expected. The broker still envisages risks to guidance based on store roll-out and margins.
Citi has upgraded to Neutral from Sell post significant de-rating of the share price since November last year. The analysts declare they don't see any near-term upside earnings risks, but they retain the view this company has "significant" earnings growth prospects in Europe.
Sales growth for the first 17 weeks of FY19 of 2.91% was in line with Macquarie's expectations. FY19 operating earnings guidance of $227-247m is reiterated and the broker believes the range is conservative.
The company’s investor briefing provided greater insight into the digital initiatives such as advertising, purchasing, rostering and food safety. The economics of store splits was also an area of focus.