Just a few years ago, Domino's Pizza Enterprises Ltd (ASX: DMP) was the bell of the ball. During the pandemic, Domino's shares were trading for over $160 each.
However COVID-era growth proved unsustainable and inflation, higher interest rates, weaker franchisee economics and disappointing international expansion hurt profits.
Fast forward to 2026, and Domino's shares have hovered around $20 per share – a huge pullback from pandemic levels.
Yesterday, the popular pizza franchise released its full-year results, prompting a heavy sell-off among investors.
Image source: Getty Images
What did Dominos report?
As reported by The Motley Fool yesterday, the company's FY26 results showed an 11% decline in revenue to $2,046.1 million and a statutory net loss after tax of $134.2 million.
Other results included:
- Underlying NPAT: $121.6 million, up 4.0%
- EBITDA: $325.4 million (underlying, down 6.1%)
- Final dividend: 32.5 cents per share, unfranked (total FY26 dividend 57.5 cents, down 25.3%)
- Net tangible assets per share: $5.04.
Investors were clearly not impressed with the result, as the share price dipped 6%.
However, the team at Bell Potter has a more balanced view moving forward.
What is Bell Potter's view on Dominos shares?
Bell Potter viewed Domino's result as broadly in line with expectations, with underlying NPAT of at the top end of guidance, supported by cost reductions and lower interest costs.
Free cash flow of $164.1m was also strong, helped by lower capex, working capital improvements, capital management and favourable tax timing.
The main negative was weaker sales, with network sales down 4% and FY26 same-store sales growth (SSSG) declining 4.1%, led by Asia, ANZ and Europe.
More concerning were the first eight weeks of FY27, when SSSG fell 5.8%, a significant deterioration from the -0.9% seen in FY26 and -1.3% in FY25, which likely contributed to the sharp share price decline.
Bell Potter has downgraded its revenue and EBITDA forecasts for FY27-29 to reflect the ongoing weak sales environment and softer consumer conditions, although it expects sales to recover to low single-digit growth by FY28.
Despite the revenue downgrades, lower expected interest costs have led Bell Potter to raise its NPAT forecasts by 7%/6%/5% for FY27/28/29, respectively.
Hold recommendation for Domino's shares
Based on this guidance, the team at Bell Potter has retained its hold recommendation on Domino's shares.
However, the broker raised its price target to $20.15 (previously $18.50).
This updated target indicates roughly 7% upside.
Without SSSG, operating leverage remains limited; and without leverage, temporary cost-out measures can only support earnings for so long before underlying operating profits come under pressure. We therefore remain HOLD rated pending clearer evidence of a sustained improvement in trading.
