MENU

Domino’s Pizza Enterprises Ltd. (ASX:DMP) shares tumble on profit miss

Domino’s Pizza Enterprises Ltd. (ASX: DMP) reported a record full year net profit after tax (NPAT) of $136 million today, 15% higher than last year and also lifted its full year dividend by 15% to 107.8 cents per share.

The results were boosted by 308 new stores that were added to the Domino’s portfolio in FY 2018 (a rate of almost 6 new stores per week).

Same store sales were also higher in Australia (+4.5%) and Europe (+5.7%) although growth in Japan (0.9%) was lagging the other markets as expected.

France winning the Soccer World Cup (the tournament started just before the year ended) did not provide a boost to sales in that country with increased food costs affecting sales.

What did management have to say

CEO Don Meij was pleased with the results and highlighted the strong sales growth in Australia and Europe as a sign that the company was delivering on its multi-market strategy.

He said, “Less than four years ago we surpassed $1 billion in sales, and this year Group Network Sales reached $2.59 billion – this continues to be a fast growth business. We delivered on positive growth in all markets but after consecutive years of significant and compounding growth, our bar for success is even higher”.

Outlook

Looking ahead, Domino’s expects robust group sales growth to continue with annual same store sales growth of 3% – 6% and annual store growth of 7% – 9% over the next 3 to 5 years.

Foolish takeaway

Overall, I think because the company delivered weak first half results, the full year results were quite positive.

Going forward, I think sales in Europe will play a significant role in driving growth for the business, but that growth comes at a cost with annual CAPEX forecast to be between $60 million – $70 million.

I think there is plenty of room for growth in this business and it could be a good addition to a diversified portfolio given today’s share price falls.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.