Domino’s Pizza Enterprises Ltd (ASX: DMP) is an Australian-owned master franchise holder for Domino’s in Australia, New Zealand, Belgium, France, the Netherlands, Japan, Germany, Luxembourg and Denmark. Domino’s has a market capitalisation of A$11.7 billion.
What are the ley features of Dominos FY21 profit result?
Dominos reported network sales of A$3.7 billion, up 14.6% compared with FY20. Online sales of A$2.96 billion, up 21.5% compared with FY20. Underlying earnings before interest and tax (EBIT) of A$293 million, up 27.2% compared with FY20. Management also noted the dividend payout ratio is to be increased from 70% to 80%.
Regarding Dominos regional performance, Asia reported sales increased by 30.9% with 126 new store openings. Europe reported sales increased by 23% with 129 new store openings. Finally, Australia and New Zealand sales increased by 6.5% with 30 new stores openings. As shown from these results, Domino’s sales growth is primarily coming from expansions into new markets in Asia and Europe.
This strong performance has allowed Dominos to pay a final dividend of A85.1 cents per share (70% franked).
What is the outlook for Dominos?
Management provided an outlook on Domino’s expansion progress through opening new stores in their key growth markets (Asia and Europe). By 2023, the company’s modelling shows Dominos will operate 6,650 stores worldwide with store growth between 9% and 12%. This is an upgrade from the previous year guidance of 5,550 stores worldwide with store growth between 7% and 9%.
Management is also expected to increase net CAPEX to A$100-A$150 million (up from A$60-A$100 million) over the next 3-5 years to grow Dominos global preserve at a faster rate. This is a welcome sign and shows that Dominos consistent growth in sales is allowing the business to invest more heavily in expanding its network globally.
What is the market reaction to Dominos FY21 profit result?
The market reaction to Domino’s profit result is positive with the share price up around 6.5% to A$134.72 while the market is up slightly by 0.2% (18 August 2021). This suggests that Dominos FY21 result is better than market expectations. Dominos trades on a forward P/E ratio in the low-fifties and has a dividend yield of around 1.1% (partially franked).
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purposes only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceedings. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.