The Domino's Pizza Enterprises Ltd (ASX: DMP) share price has seen plenty of volatility over the past few weeks and months. But, a director saw an opportunity with the S&P/ASX 200 Index (ASX: XJO) share.
In 2022 to date, the Domino's share price has dropped by around 50%. This has been a painful period for shareholders.
Not only is the business being affected by the widespread concern about high inflation and rising interest rates, but it's also losing the boost it received from lockdowns when more people were ordering home delivery.
What's happening with Domino's shares now?
In the first three trading days of November, the Domino's share price fell by more than 16%.
On 2 November 2022, the food business held its annual general meeting (AGM).
The company reminded its shareholders that in FY22, network sales increased 4.6% to $3.92 billion and underlying earnings before interest and tax (EBIT) dropped 10.5% to $262.9 million.
In FY22, it organically added 294 new stores, which was a 10% increase in the network. It also acquired 156 stores and expanded into its tenth market, Taiwan.
However, investors may have been troubled by the FY23 trading update. Domino's said that in the financial year to date, network sales were down 1.8%, with same-store-sales down 1%. However, in October, same-store-sales were up 1.6%.
Domino's said that after a challenging first quarter, as expected, sales have improved in October. It is forecast to end FY22 within the medium-term outlook of 3% to 6%.
It has added 41 more stores in FY23 so far.
However, inflation will challenge earnings. Management expects to deliver net profit after tax (NPAT) growth in FY23.
The company intends to set a new record for network expansion in FY23, aiming to beat the FY16 record of 484 stores.
Director investment
Yesterday, it was announced that director Tony Peake's superannuation fund had added 1,600 Domino's shares through an on-market trade.
The cost of those 1,600 shares was $53.71 per share, meaning the total cost was around $86,000.
Keep in mind that prior to this investment, his wife held 1,400 shares and the superannuation fund owned 1,000 shares. So, the investment increased the family's position by quite a lot.
I think it's worthwhile taking note when directors buy shares of their business. Because it can indicate that they believe the Domino's share price is good value and that the company has a compelling future.
Foolish takeaway
After the heavy fall in the valuation of the ASX 200 share, the Domino's share price is valued at 31x FY23's estimated earnings and 24x FY24's estimated earnings, according to CommSec. This price might be much more digestible for investors, particularly if the business can continue to grow its same-store-sales and store network.
