Domino's Pizza Enterprises Ltd. delivers record profit: Is it too late to buy?

Domino's Pizza Enterprises Ltd. (ASX:DMP) continues to deliver great results for its shareholders.

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What: Shares in Domino's Pizza Enterprises Ltd. (ASX: DMP) look set to trade higher today after the leading pizza chain reported a 44.2% leap in net profit after tax (NPAT) to a record $29.1 million for the half year.

So what: It's hard to find fault with the company's results. Revenue jumped 29.5% to $343.6 million; the earnings before interest and tax (EBIT) margin expanded to 13.7%, which helped lift EBIT by 43.3% to $47 million; while earnings per share and the dividend grew 37% and 39% respectively to 33.8 cents per share (cps) and 24.6 cps.

Domino's high quality result explains why this stock is so popular with investors. Amongst the other highlights from the interim report were:

  • same store sales growth of a whopping 8.6%. In comparison, in the prior corresponding half same store sales growth was 4.6%
  • a record number of 92 new store openings across its operating regions of Australia, New Zealand, Japan and Europe (including France, Belgium and the Netherlands).

Now what: For investors considering adding this high growth stock to their portfolios, as always when it comes to investing, there are pros and cons.

Management took the opportunity to upgrade its full year growth guidance for earnings before interest, tax, depreciation and amortisation to 30% and NPAT to 32.5%. Meanwhile, group wide same store sales growth was upgraded to 6% to 8% and new store openings expectations were increased to 180 – 200 new stores.

Tallied up there is a lot of positive growth momentum in this stock and it could keep the share price trending higher.

On the flip side, the stock is arguably fully valued at present which means there could be better investment opportunities elsewhere.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.  

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