Will Investors Fancy A Slice Of Domino’s Pizza?
Spreadex | Apr 24, 2018 10:16
The fast food chain had a pretty chaotic 2017. It had hit a high of £3.95 by early March, only to plunge all the way to £2.70 by summer. It did manage to bounce back by the end of the year, though its closing price of £3.47 was still a 4% decline across the 12 months.
So far its 2018 performance has been a mini-version of that pattern. The stock spiked above £3.50 at the end of January, before dropping to a 5 month low of just above £3 by the start of March. Yet it has rebounded since then, with Domino’s Pizza Group PLC now at a current trading price of £3.50.
It was the firm’s full year results that lifted it from those March lows. While pre-tax profits dropped from £82.5 million to £81.2 million year-on-year thanks to a £15 million net non-underlying expense, that was still better than forecast. Total revenue for the 52 weeks to 24th December rose 29.3% to £474.6 million, while total group systems sales shot up 15.1% to £1.18 billion, with UK system sales breaking the £1 billion mark for the first time.
Domino’s also updated on the start of its new financial year, stating that for the first 8 weeks of 2018 total UK system sales had risen 10.9%, or 7.1% on a like-for-like basis. It also said it was targeting 65-75 new store openings across the year, with capex of £30 million and £50 million in share buybacks (including the £18 million already completed).
The big question now is whether the ‘Beast from the East’ has caused that sales growth to stall, or whether the cold snap actually caused an increase in people ringing for a pizza from the comfort of home.
Domino’s Pizza Group Plc (LON:DOM) has a consensus rating of ‘Hold’ alongside an average target price of £3.68.
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