The market may have dropped lower today, but that hasn’t stopped the Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price from pushing higher.
At the time of writing, the pizza chain operator’s shares are up 0.5% to $39.69. Its shares were up as much as 1.5% in early trade.
Why is the Domino’s share price edging higher?
Investors have been buying the company’s shares today after brokers responded positively to its CEOs Webcast.
Domino’s held the webcast after the market closed on Wednesday. According to the release, the format included regional company executives providing a brief update on the most frequent topics requested by investors since the half year results.
One broker that appears to have liked what it heard was Goldman Sachs. Following the event, the broker reiterated its buy rating and $50.50 price target. This price target implies potential upside of around 27% for Domino’s shares over the next 12 months.
What was revealed at the Domino’s event?
According to a note out of Goldman Sachs, the company revealed that progress in Europe has been encouraging.
Domino’s advised that it has now completed the conversion of all Hallo Pizza stores and has a strong pipeline of organic expansion opportunities in both Germany and France.
It also revealed that its first stores in Luxembourg and Denmark are due to open in the near future. The Denmark store will open in the coming weeks, whereas the Luxembourg store is expected to open in late August or early September.
Back home in the ANZ region, the company has seen improvements in its net promoter score (NPS) and customer feedback following the rollout of its pizza checker. It also advised that customers have responded well to its $15 pizza promotion. This has driven greater volumes of premium pizzas.
And finally, over in Japan the ‘Barbell Menu’ strategy (flexible pricing model) has helped maintain its premium positioning while also reaching out to low volume customers.
All in all, the broker believes that Domino’s organic growth pipeline remains strong and the “takeaways of the call remained positive” and supported its buy recommendation.
The shares of fellow quick service restaurant operator Collins Foods Ltd (ASX: CKF) have also pushed higher today. As it is expanding in the European market with the KFC brand, investors may believe things are going well for it also.
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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods Limited and 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.
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