Australian (ASX) Stock Market Forum

DMP - Domino's Pizza Enterprises

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Dona Ferentes said:
David Thornton: Hello and welcome to Buy Hold Sell. I’m your host, David Thornton. It’s been a pretty wild ride for stocks in 2022, but the ASX 200 is holding up pretty well.

Today, we’re going to discuss three of the best performing stocks in the 200, and also two laggards. For that, we’re joined by Anthony Aboud from Perpetual, and Sean Fenton from Sage Capital.

David Thornton: Okay. The other laggard, Domino’s. That one, Domino’s has not had a good time of it. It’s lost about two thirds of its value since September. Now sitting at $63. Buy, hold, or sell?

Anthony Aboud (SELL): I still think it’s a sell. I think that the market consistently overestimates these guys. This time last year for FY23, the market had $3 a share in EPS forecast. It’s now going to be just over $2. Our problem is in the short term we think franchisee profitability is going to be tough. They’ve got labour price going up. You got cost of goods sold from going up. And therefore, we think the rollout of stores is going to be tough, so the growth’s not going to be there and still 30 x PE. For us, it’s just not there yet, so we still think it’s a sell.

David Thornton: Sean, they’re rolling out stores. Is it a sell for you?

Sean Fenton (SELL): Yeah, I think it is. I’m finding myself agreeing with Anthony a lot today, I don’t know, it’s worrying me a little bit. But yeah, it was a bit of a COVID-19 beneficiary. It’s fallen a long way, but got ridiculously expensive. And what I’m just uncertain about is, as we open up normalisation, what happens to that pizza demand? They did really well in Japan, but it’s been a struggle longer term. How much of that does that turn around? And you’ve got cost pressure inflation there. Don’t forget they’ve got a delivery model. Drivers, labour, petrol, pizza, wheat, cheese, dairy, pepperoni, it’s all going up. Yeah, a bit of margin pressure and a fair bit of uncertainty. It’s just not cheap enough to get excited about.
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For a change, I agree with SELL DMP recommendations.
First of all health consciousness is pushing people to buy quality pizzas than DMP.
Unless there is a deal coupon DMP prices are almost near by of general good pizzas.
Not a great pizza fan, but whenever I buy in Perth always went for $25 a piece pizza made by local pizza shops than franchis domino pizzas.
Look at the crowd of people in even those pizza shops compared to young operators ( probably half the labour rate or so) in Domino shops. They are like Robots to take and execute orders. Then what you get, what you paid for.
Finally people are having higher purchasing powers than they were probably 2 years back. So a bit of indulgence in going for quality pizzas than Domino's.
Hope it will turn around. Buy the capex on multiple outlets will have competition within Domino shops keeping good pizzas are more welcomed.
DNH
 
I can't say franchise food is my thing. The economies of process tend to produce a low quality product. And the constant advertising, gimmicks etc!!

Our local place does authentic pizza, but it's not cheap. Buy mid week and he'll brown the top for 10 seconds but Fri/Sat he's too busy. The signature Pear, blue vein cheese, Prosciutto San Daniele, parmesan, rocket was $24 pre-Covid crept up to $25, just recently to 28, and now suddenly $32.
 
“Domino’s has seen some softening in delivery and an increase in carry-out, due to value-focused customers’ choices and an increase in more normalised pre-COVID occasions, including carry-out meals ordered during lunch times or after work in the CBD”
Market Statement, Domino's Pizza Enterprises Ltd
 
One of my picks for the 2023 full year competition.

My reasoning is simply that as economic conditions become somewhat tighter, I'm expecting consumers to shift preferences to cheaper options and that's exactly what DMP offers. It's product is price competitive with direct competitors, and is cheap versus most alternatives.

That plus the share price is somewhat beaten up at present. :2twocents
 
Smurf1976 said:
One of my picks for the 2023 full year competition.

My reasoning is simply that as economic conditions become somewhat tighter, I'm expecting consumers to shift preferences to cheaper options and that's exactly what DMP offers. It's product is price competitive with direct competitors, and is cheap versus most alternatives.

That plus the share price is somewhat beaten up at present. :2twocents
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As an end user like me who has been using them constantly for 20 years or so I've got a few laymen's words to say. If DMP hasn't failed after all these years with all the crashes/wars/pandemics then I think there is very little chance of any collapse in the future. They could have come across as a "race to the bottom" company with their prices in the past but this has changed now. They have moved their prices up from around $14 a traditional pizza to around $17 in the last 12 Months. They have also cut back a lot of buy one get free type of offers too. I can tell as a consumer that they have factored in all the price increases for their ingredients and I feel as though they are protecting their business. They still offer a reasonable product and I still use them and hope they will be a profitable company for shareholders, good luck mate.
 
DMPster dive.

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But all a bit tricky when rated as s tech driven growth story...
Domino’s Pizza shares plunged 20 per cent to $57.08 by 10.15am AEDT in early trading on the ASX after a dive in profits and a 24 per cent cut in the first half dividend payout.

Sales have slowed faster than anticipated in the past few weeks, with repeat orders from customers declining after Domino’s lifted prices to try to combat inflation, the largest slowdown being in Europe and Asia. The group has 3736 outlets around the world.

The company said overall sales growth in the seven weeks since January 1 rose 4.2 per cent but same-store sales retreated 2.2 per cent. A “more for more” marketing strategy has not worked as well as expected. The company lifted prices and added surcharges to try to combat a jump in raw material costs in food and in energy, but many customers simply ordered on fewer occasions.

"We haven’t always had the balance right for some customer groups”, Domino’s Pizza CEO Don Meij said . “We just didn’t get it quite right, and it just unwound."
 
Bill M said:
. They still offer a reasonable product and I still use them
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The reasonable product, was always very ordinary, however their recent changes that you mentioned, see's quite a different product. It's now smaller and of a further reduced quality.
As a family, we used to get some maybe once a month or so, not anymore, it's off the list.

A local pizza shop (non chain) did the same thing, upped prices and reduced size, with the end result also being reduced quality.
Not a customer there either anymore.

I understand I inflation and shrinkflation, however, reduced quality is just plain silly and stupid.
 
Dumping further.
Closing 70 outlets worldwide.
30 of those in Denmark; a total exit from Denmark.
If only their pizzas were nice!
Their up against wood fired tarte flambee or flammkuchen over there... nothing like a nice Alsatian tarte.

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frugal.rock said:
Dumping further.
Closing 70 outlets worldwide.
30 of those in Denmark; a total exit from Denmark.
If only their pizzas were nice!
Their up against wood fired tarte flambee or flammkuchen over there... nothing like a nice Alsatian tarte.

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Honestly, even Domino pizzas appear to be cheap after using all those discount coupons but no one buys pizzas every night. When I compared the quality of pizza available from local pizza shops @$25 or so, I will never buy a Domino pizza. It is quality and just not cheapy.
This is one of the big issues with Domino's Fall - people want quality and not numbers.
DNH DMP but this is why I did not invest in DMP stocks - walking the talk.
 
Miner said:
Honestly, even Domino pizzas appear to be cheap after using all those discount coupons but no one buys pizzas every night. When I compared the quality of pizza available from local pizza shops @$25 or so, I will never buy a Domino pizza. It is quality and just not cheapy.
This is one of the big issues with Domino's Fall - people want quality and not numbers.
DNH DMP but this is why I did not invest in DMP stocks - walking the talk.
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For us and we like pizzas that Dominos was a so so, to bad product. The few times we bought one, it was never cooked properly, and the staff didn't like being told so.
Home made, doesn't take much effort, is the best by a country mile.
 
nothing to sink your teeth into, here.

Stale model, stale product, a race to the bottom.

Can't wait till the mgmt margin calls?
 
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