The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price was a very strong performer on Wednesday.
The pizza chain operator’s shares finished the day 7.5% higher at $105.00.
This means the Domino’s share price is now up 83% over the last 12 months.
Why did the Domino’s share price surge higher?
Investors were fighting to get hold of Domino’s shares yesterday following the release of a strong half year result.
For the six months ended 31 December, Domino’s delivered a 16.5% increase in total global food sales to $1.84 billion. This strong top line growth was driven by same store sales growth of 8.5% and the opening of 131 organic new stores.
Thanks to operating leverage, Domino’s earnings before interest and tax (EBIT) grew 32.3% to $153 million and its underlying net profit after tax increased 32.8% to $96.2 million.
While this was ahead of the market’s expectations, arguably what got investors most excited was management’s outlook commentary.
Domino’s CEO and Managing Director, Don Meij, advised that the company intends “to significantly outperform this strong result in the Second Half.”
Is it too late to buy Domino’s shares?
Although the Domino’s share price has rallied strongly over the last 12 months, analysts at Goldman Sachs believe it can still go higher.
According to a note out of the investment bank, this morning the broker retained its conviction buy rating and lifted its price target to $112.60. This compares to its previous price target of $88.00.
Goldman Sachs commented: “Although short term performance has been positively impacted by the pandemic, DMP is in an increasingly strong position as it builds on recent momentum and takes advantage of opportunities in the market. We forecast both Japan and Europe to deliver significant store and earnings growth over the next three years, amounting to 24% and 23% EBITDA CAGR to FY23.”