The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is flat at $47.60 this afternoon despite the group revealing that its CEO Don Meij has sold 43,343 shares at $47.7892 per share for around $2.07 million.
According to a company announcement the share sale was to help Mr Meij meet tax obligations. Commonly company employees that receive shares via options are liable for huge tax bills even if they have not crystallised the value of the shares by selling them.
Domino’s has been a strong share market performer over the long term thanks to its rapid expansion in Australia, strong same-store sales growth, and an aggressive push into overseas markets like Japan, France and Germany.
However, it has its detractors in part due to the CEO’s consistent recent habit of issuing overly optimistic growth forecasts that the business could not meet.
The CEO has now officially abandoned ’12 month guidance’ (deeming it unnecessary) and instead is now targeting 3%-6% same store sales growth annually over 3 to 5 years and store growth of 7%-9% annually at a group level.
In fiscal 2019 Domino’s paid $1.155 in dividends on ‘adjusted’ earnings per share of $1.65 to mean it offers a trailing yield of 2.4% and trades on 29x earnings. As such we can see that investors are still baking plenty of growth into the share price.
Another fast food franchisor is KFC merchant Collins Foods Limited (ASX: CKF). It actually trades on a cheaper valuation with a bigger yield. It could be worth some research in my opinion.
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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.