Own Domino’s (ASX:DMP) shares? What to expect from its FY21 results

This pizza chain operator is having a very strong year…

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Domino’s Pizza Enterprises Ltd (ASX: DMP) shares have been very strong performer in 2021.

Since the start of the year, the pizza chain operator’s shares have risen a sizeable 38% to $121.61.

In light of this, expectations are high for its full year results later this month.

What is the market expecting from Domino’s in FY 2021?

According to a note out of Goldman Sachs, its analysts are expecting Domino’s to report strong growth for FY 2021. The broker is expecting:

  • Network sales growth of 13.9% to $3.7 billion and revenue growth of 14.5% to $2.2 billion
  • ANZ same store sales (SSS) growth of 3.5%, Europe SSS growth of 6.8%, and Japan SSS of 15%
  • Underlying EBITDA increase of 23.8% to $391.4 million
  • Underlying net profit after tax up 33.1% to $193.8 million
  • Final dividend of 69.2 cents per share

What did the broker say?

Goldman Sachs notes that its estimates imply above consensus growth in FY 2021.

It commented: “We expect FY21 EBITDA to be at A$437.7mn on a post AASB16 basis, +4.5% vs. consensus. We note that our FY21 earnings outlook implies a beat on both medium term guidance of 3-6% SSS growth (GSe +7.8%) and 7-9% net store openings (+10.5%) for FY21 driven by an underlying trading momentum attributable to the pandemic as well as strong store openings, including those delayed by the pandemic in the prior year. We also forecast store openings to be ahead of the 7-9% guidance into FY22, but normalize thereafter.”

In addition to this, the broker has suggested investors look out for commentary on potential merger and acquisition (M&A) plans and new store openings. Positive details on these facotrs could be a boost for Domino’s shares.

Goldman said: “Key factors to watch for in FY21 earnings release from our perspective will be commentary regarding the momentum of new store openings especially in Europe, any details on M&A progress including Taiwan, which has already been announced and ongoing trading momentum.”

Are Domino’s shares in the buy zone?

While Goldman Sachs currently has a conviction buy rating on Domino’s shares, its price target of $121.40 is roughly in line with where they trade today.

This could make it worth waiting for its results before considering an investment in Domino’s shares at this stage.

Should you invest $1,000 in Domino's right now?

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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