Domino's Pizza Enterprises Ltd (ASX: DMP) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) fast food pizza retailer closed on Friday trading for $15.36. In afternoon trade on Monday, shares are changing hands for $15.51 apiece, up 1%.
For some context, the ASX 200 is up 0.4% at this same time.
While today's outperformance will be welcome news to stockholders, Domino's shares have a long way to go before recouping the past year's 56.6% losses. Though that doesn't include the 77 cents per share in unfranked dividends Domino's paid out over the full year.
Domino's currently trades on an unfranked trailing dividend yield of 5%.
So, with the company's share price having lost more than half its value over the past 12 months, is the ASX 200 stock now a bargain buy?
Image source: Getty Images
Domino's shares: Buy, hold, or sell?
Bell Potter Securities' Christopher Watt recently ran his slide rule over the ASX 200 pizza retailer (courtesy of The Bull).
"The fast food giant recently posted its first annual net loss since listing in May 2005," said Watt, who has a sell recommendation on Domino's shares.
"A statutory net loss of $3.7 million in fiscal year 2025 was impacted by one-off items," he said.
According to Watt:
Guidance is cautious, and earnings before interest and tax pressures persist despite aggressive restructuring. Franchisee sentiment is mixed, and higher input costs are unlikely to ease in the near term.
Domino's reported underlying EBIT of $198.1 million for FY 2025, down 4.6% from the prior year. The final Domino's dividend of 21.5 cents per share was down 57.3% from the FY 2024 final payout.
Despite the big retrace over the past year, Watt believes Domino's stock could have further to fall. He noted:
In our view, the company's valuation remains demanding versus earnings certainty amid downside risks to consensus estimates. The shares have fallen from $19.36 on August 26, the day prior to full year results, to trade at $15.35 on October 23.
In our opinion, execution risk overshadows recovery hopes.
A word from ASX 200 pizza retailer's CEO
Commenting on the FY 2025 results that saw Domino's shares close down a sharp 22% on the day of reporting, executive chair Jack Cowin said:
We're taking action to make Domino's a leaner, more efficient business. That means reducing costs – and using those savings to support our franchise partners and invest in marketing that drives sales. We will share the rewards when we get it right – with customers, with partners, and with shareholders.
