 GSW - not sure, I was looking for a share price starting with a 3 before I opened a short. The strength of the buying yesterday caught me by surprise - I did notice that a couple of the more recent holding RNSs were American institutions increasing their stake so I figured they might chase it up higher. I also noticed that WorldQuant were reducing (slightly) their short which could have added to the buying pressure.
Anyways, if the share price starts with a 3, given the debt level, and the ongoing franchisee dispute (not that it knocked new openings that much in Q1 and Q3) then I'll be looking to go short. For what it's worth I don't see the dispute with the franchisees going away as they (Dominos) want to open more stores - 1600 being the UK capacity - but none of these stores are in new areas, so they continue to canabalise sales from existing franchisees. I would guess that a 40% rise in the number of stores would only lead to a 20% rise in revenue. Not that the franchiser cares, they're just interested in gross sales and restaurant numbers, as that's how they make their money. Thus I don't see the franchisee dispute going away anytime soon - too much tension unless Dominos want to sacrifice margin? |
Yes but what height is that fraz. Went short a bit too early yesterday |
Mr Market is being ever so kind. But he might yet be kinder still - the American Domino's Pizza sells for 28x earnings (I think). Now, rough back of the envelope calculations suggest an underlying EPS this year of around 17p (excluding the international business) for the UK business. The question is, given the maturity of the business in the UK/ROI what multiple is the market prepared to give it? 20? Seems fanciful to me - I'll be going short if it gets to such dizzy heights. |
That's Canaccord's target hit ;-) |
Canaccord 'buy' tp 285p |
Peel Hunt upgrades to 'buy' tp 325p up from 300p |
Agreed. Kind of. I think the CEO was calling the shots and he's leaving anyway. I'm quite amused that they had $8m of Capex (in H2 I think) committed to international prior to this update, and then, after getting a few consultants in, they've suddenly decided they would be better off in the hands of a new owner. What will be interesting is, the price. Asset or liability? Asset, I assume. But they'll continue to haemorrhage earnings until they release them. |
So they've decided to exit their international efforts. The entire Domino's board should be fired immediately for their incompetence and failure.
Not a holder. |
Well received :-) |
Share price increase approximately equal, in percentage terms, to the increase in EPS due to the binning of the international business. It’ll be interesting to see where it goes from here |
Market loves it! |
UK steady as you go, ROI previously strong, not so this time... UK LFL 1.4% excluding splits - so it’s a pretty mature business in the UK, with each new restaurant eating into the old once food price inflation is accounted for (3%). So, what do you want to pay for that business 14 to 16 times earnings? Looks expensive to me. I’ll bet on a down day |
Could go either way Gabster. I would lean towards positive. The institutions say they look forward and clearing the decks should be popular. At the end of the day the UK and Ireland business is pretty solid and dominant in the market. Downsides, need to find CEO and Chair, continuing dispute with franchisee, and of course the size of hit on International is as yet unknown. |
Q3 Trading Update:
Group system sales up 3.4%
Solid UK & ROI performance; system sales growth 3.9%
UK system sales up 3.9%; LFL sales excluding splits up 3.0% (1.4% including splits)
ROI system sales up 2.4% in local currency; LFL sales excluding splits down 0.7% (down 1.7% including splits; both local currency)
12 stores opened in UK & ROI in Q3 (UK: 9; ROI: 3)
UK online sales up 7.2% and ROI online sales up 9.9%. Online now accounts for 90.9% of delivery sales
International: Review of International markets concluded; the Board has decided to exit the markets in an orderly manner
Huge impairment coming up on international, this will boost EPS but plunge the balance sheet into negative book value.. let's see how the market reacts. |
Broker tips: Domino's Pizza
Analysts at Liberum don't see much changing in the immediate future for Domino's Pizza, expecting its weak performance of late to carry on throughout the third quarter despite easier comparatives.
The broker said inertia exists with regards to Domino's row with franchisees, which has worsened to such an extent that franchisees were now refusing to do national campaigns which may be to their own detriment - indicating the scale of the challenge ahead.
"If however, trading has not been impacted by this boycott, raises the question why the Plc should run the NAF and do group marketing," said Liberum, which reiterated its 'sell' rating on Domino's.
"Short term we are concerned about elevated debt levels. While a disposal of International would remove P&L losses, stem cash outflow and deliver +7% EPS this would not provide any impetus for us to change our investment case stance."
Liberum noted that a new chief executive and chairman would be received well, but their effect may be "limited by time", the potential scale of a reset and their ability to get the franchisees to the negotiating table. |
I used to trade DOM but haven't touched them for a year or two as their Finance directors keep resigning. |
Q3 Trading Statement due 17 Oct. hope it's good news! |
Ha ha Ian, no honestly no vans with livery on just cars with beacons on top. |
Luderitz.
Its just you. If you are seeing cars driving around with Dominos beacons on top, it may be time to see the Doctor. Maybe a biblical vision, time to buy. |
Is it just me or have they stopped using their own cars in favour of ordinary cars with a Domino beacon on top?
I don’t hold at the moment. |
'Domino’s struggles as rival delivery services threaten to topple it'
It used to be the go-to chain for couch potatoes, but consumer habits are changing with the rise of Deliveroo and Just Eat |
Interesting story re: Pizza Express having to hand over 2.23 for every 13.00 pizza it sells, just to cover its debt interest.
Also, changing tastes. |
Just saying. Sometimes we all get tared with the same brush...
robinnicolson8 Oct '19 - 14:28 - 3264 of 3271
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Why the link to results from Domino's Pizza USA? |
Domino's Pizza Group was down 1.9% after Jefferies started the firm with an Underperform rating.
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