Since the turn of the century, Domino's Pizza (DOM) has had a steeper share price growth profile than US tech giant Apple (US:AAPL). That's quite a stat for a company whose singular focus is fresh pizza to order. Domino's has revolutionised the takeaway food arena and its position as a market disrupter has served it well. But today, competition from Just Eat (JE.), Hungry House and Deliveroo is rising. So the news that like-for-like UK revenue growth slowed to 1.5 per cent in the first nine weeks of 2017, from 7.5 per cent in the reported period, triggered a share price slump.
Domino's performed solidly in 2016. The group opened a record 81 stores in the UK, helping to send overall domestic revenue up 14 per cent. Digital investment means that online orders now make up 72 per cent of sales, and increased operating efficiencies sent gross profit margins up by 115 basis points to 40 per cent.
The growth profile remains exciting outside of the UK, with Ireland and Switzerland in particular outpacing the home market. The acquisition of Dolly Dimple's in Norway is sure to feed this dynamic. Broker Numis expects pre-tax profit of £93.8m for the year to December 2017, giving EPS of 15.2p (from £85.7m and 13.8p in 2016).
DOMINO'S PIZZA (DOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 337p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 336.6-336.8p | 12-MONTH HIGH: | 406p | LOW: 301p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 22p | NET DEBT | 32% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012* | 241 | 42.4 | 6.3 | 4.8 |
| 2013* | 267 | 21.6 | 3.6 | 5.3 |
| 2014* | 289 | 62.1 | 9.9 | 5.8 |
| 2015* | 317 | 73.2 | 11.9 | 6.9 |
| 2016 | 361 | 82.5 | 13.1 | 8.0 |
| % change | +14 | +13 | +10 | +16 |
Ex-div: 16 Mar Payment: 25 Apr *EPS and DPS figures adjusted for three-for-one share split in Jun 2016 | ||||
