What’s the outlook for Domino’s Pizza Enterprises Ltd shares?

If you’ve been a shareholder in Domino’s Pizza Enterprises Ltd (ASX: DMP) over the long term you would certainly be happy with the company’s performance – the share price has gained around 1,300% in the past decade and over 700% in the past five years.

Likewise, more recent shareholders will also be immensely pleased considering the stock has gained 88% in the past 12 months and 25% in the past six months.

With the company due to report its interim results for the half year ended 31 December 2015 on February 17, shareholders will be hoping for the positive momentum to continue.

Here’s what investors are currently expecting…

After reporting revenue growth of 19.3% to $702 million and earnings per share growth of 36% to 74.2 cents per share in financial year (FY) 2015 management provided the following “Looking Forward” comments at the time of the full year results announcement in August:

  • The Australia and New Zealand (ANZ) region has over 40 exciting digital projects in the pipeline for FY 2016 according to CEO Mr Don Meij including many which will make the ordering process even faster and easier for customers
  • The digital projects are expected to assist Domino’s in reaching record store growth across ANZ in FY 2016
  • In Europe the strong organic store growth trend is expected to continue
  • In Japan the company is eyeing the opening of a further 60 stores to add to the already 400 stores there
  • Across the group a total of 180 to 200 new stores are forecast to be opened with the longer term objective of 3,100 stores by 2025 remaining unchanged
  • Management provided guidance for same-store-sales (SSS) growth of between 6% and 8% for ANZ, 4% to 6% for Europe and 1% to 2% for Japan.
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) and net profit after tax (NPAT) growth guidance was for approximately 20%

Since August a number of further positive announcements have been made:

  • The major acquisition of Pizza Sprint in France has led to the group upgrading its expected new store openings for FY 2016 to between 260 and 280 stores
  • At Domino’s annual general meeting in November, management upgraded the full year outlook to SSS growth of between 9% and 11% for ANZ, 6% to 8% for Europe and 1% to 2% for Japan
  • In December, Domino’s announced the acquisition of Joey’s Pizza in Germany and also took the opportunity to upgrade its guidance for underlying EBITDA and underlying NPAT to be in the region of 30%

All-in-all the news flow from Domino’s has been very positive since the group posted stellar FY 2015 results. The upcoming interim result looks bound to continue this strong growth trend.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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