Domino’s (ASX:DMP) share price higher after delivering strong first half growth

The Domino’s Pizza Enterprises Ltd (ASX:DMP) share price is on the move on Wednesday following the release of its half year results…

| More on:
asx pizza share price represented by hand taking slice of pizza

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In morning trade Domino’s Pizza Enterprises Ltd (ASX: DMP) shares are pushing higher following the release of the company’s half-year results. At the time of writing, the Domino’s share price is up 3.32% to $101.23.

What’s driving the Domino’s share price?

The Domino’s share price is on the rise after the company delivered strong sales growth and even stronger earnings growth during the first half of FY 2021.

For the six months ended 31 December, Domino’s delivered total global food sales of $1.84 billion. This was an increase of $260.8 million or 16.5% over the prior corresponding period.

This strong top line growth was driven by same store sales growth of 8.5% and the opening of 131 organic new stores. The majority of its new store openings were in Japan, with 68 new stores. This was supported by 50 new stores Europe and 13 new stores in the ANZ market.

Thanks to margin expansion, Domino’s earnings before interest and tax (EBIT) grew at the even quicker rate of 32.3% to $153 million.

This was predominantly driven by its international operations, which delivered EBIT growth of 55.7% to $99.9 million. Its international operations now account for 65.3% of total EBIT. ANZ EBIT grew 9.8% to $63.7 million.

On the bottom line, the company’s underlying net profit after tax increased 32.8% to $96.2 million.

Also growing strongly was the pizza chain operator’s free cash flow. It came in 50.3% higher at $124.4 million.

This allowed the Domino’s board to declare an interim dividend of 88.4 cents per share (50% franked). This represents an increase of 32.5% over last year’s dividend.

Management commentary

Domino’s CEO and Managing Director, Don Meij, was very pleased with the company’s performance. He believes the result reflects experienced management and franchisees executing on a long-term strategy, rather than one-off costs or short-term sales attributable to COVID-19.

He said: “The performance this half predominantly reflects the benefits from investing in, and strengthening, our franchisee base and expanding our store footprint on a global scale, and the efforts of tens of thousands of our people executing against our strategy.”

“Despite the unique challenges of this time, store openings have accelerated with an average of five new stores opening each week, which reflects the confidence Domino’s, and our franchisees, share in our future. We intend to significantly outperform this strong result in the Second Half.”


As Mr Meij stated above, Domino’s intends to “significantly outperform” its strong first half result in the second half.

And the company certainly is on course to do this, with total network sales growing 20.9% during the first seven weeks of the second half. This has been driven by same stores sales growth of 10.1% over the period. Management also revealed that it has already opened 11 new stores since the end of the first half.

Mr Meij commented: “We continue to experience uncertain times, but have confidence the clear principles that have delivered Domino’s success, before and during COVID-19, will guide this next phase.”

“Our team’s agile response to changing conditions has lifted our expectations for Full Year performance to be even higher than our already positive, medium-term outlook. With a strong balance sheet and franchisee profitability, we intend to accelerate expansion,” he concluded.

The Domino’s share price has surged more than 70% over the past 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Three business people join hands in strength and unity
Share Market News

Here are 3 ASX blue-chip shares reporting this week

Keep your eyes peeled for reports from these ASX heavyweights.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Monday

The ASX 200 is expected to have a strong day on Monday...

Read more »

happy investor, share price rise, increase, up
Small Cap Shares

2 exciting small cap ASX shares to buy according to brokers

These small cap ASX shares have been named as buys by brokers...

Read more »

Two men lok sxcited on the trading floor.
Share Market News

5 ASX directors loading up on their companies’ shares in August

Who is buying more shares in Straker Translations, Eagers Automotive, and United Malt Group?

Read more »

A white and black clock face is shown with three hands saying Time to Buy reflecting Citi's view that it's time to buy ASX 200 banks
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers are feeling positive about these ASX shares...

Read more »

A group of five people dressed in black business suits scrabble in a flurry of banknotes that are whirling around them, some in the air, others on the ground as some of them bend to pick up the money.
Technology Shares

2 ASX tech shares about to go cash-flow positive

After massive interest rate rises, using your own cash to operate is so much better than borrowing to survive.

Read more »

two young boys dressed in business suits and wearing spectacles look at each other in rapture with wide open mouths and holding large fans of banknotes with other banknotes, coins and a piggybank on the table in front of them and a bag of cash at the side.

This fund manager just named 2 unloved ASX All Ords shares as turnaround buys

AMP is one of WAM’s contrarian portfolio picks.

Read more »

A woman sits on a step laughing at something on her mobile phone as it is being charged by a lithium-powered battery.
Materials Shares

Up 30% in a month, can the Pilbara Minerals share price keep rising?

Is this lithium share going to keep rising?

Read more »