Domino's Pizza Share Discussion Threads

[trt] 07/6/2007 19:27

Yes but the para that matters more is the one that refers to exceeding market expectations. As previosuly stated no other listed company has been able to make such an announcement after only four months into their financial year. The growth in sales that DOM must now be experiencing is huge especially now the Ireland online platform is up and running.

I believe we are in for a treat come the interims in the next few weeks and if they have maintained or beaten that current like for like sales rate then the £3.00 level will be blown away.

I am going long as we approach the results as the news will be well received by the market and I want to get ahead of other investros who try and pile in on the announcement.

However, I accept perhaps we must agree to disagree on certain points

Regards

[techmark] 07/6/2007 16:22

Err I'm using the post split adjusted equivalent. Look at the chart.

Secondly everybody knows the facts that you keep on spouting, however, not once have I seen anybody refer to the part of the statement I posted. So don't talk to me about being selective.

Regards

[trt] 07/6/2007 16:18

Firstly the shares have never been at £1.90 they went post split at £2.40.

Secondly you coveniently left out the following - " growth was driven by our successful product and marketing innovations. A key driver was also our continuing focus on improving operational standards, and in particular, improving the speed of service to our customers.

As a result of our strong trading and on track store openings, we anticipate results for the financial year to be ahead of current market expectations.

As of today, there are 464 Domino's Pizza stores open and trading in the UK and Ireland and the market continues to offer strong growth opportunities, with the potential for up to 1,000 stores in these territories. We will continue to focus exclusively on developing the Domino's Pizza brand in these markets."

[techmark] 07/6/2007 16:07

The market has already price that in, that's why the shares went from 190 - 280p.

When too many people jump onto the same boat, what happens?

We are very encouraged by the strong start to the year, but are mindful of the
very strong comparatives last year as a result of the football World Cup in June
/July 2006 and the strong product launch/marketing campaign in the last quarter
of 2006. Whilst prospects for 2007 are excellent, we are unlikely to be able to
maintain the like-for-like growth rate achieved in the first 16 weeks of the
year.

[trt] 07/6/2007 15:14

With the results imminent watch for investors piling in. Very dangerous to go short when a company has just annonuced it will exceed full year market expectations when it is only four months into its financial year.

In fact go long from here as broker upgrades will follow the results

[techmark] 07/6/2007 14:42

Significantly overvalued in my opinion and going lower. Target price 180-200p.

[trt] 07/6/2007 08:02

Domino's Pizza's 14.6% jump in like-for-like sales in the 16 weeks to April 22 is all the more impressive given the early onset of the barbecue season. With the prospect of more share buybacks in the future, buy says the Times.

[keran] 06/6/2007 14:29

Price has been up and down over the last few weeks, however I added to my holding today in anticipation of those forecast busting results which are only 6 weeks away.

[trt] 01/6/2007 15:51

I just love these buying opportunities

[indieman] 01/6/2007 15:45

Repeat post 736

[trt] 01/6/2007 15:15

Lovely grabbed a few more !!!!

[trt] 31/5/2007 15:23

Back up we go hold onto your hats - can't keep a good share down for long !!!

[trt] 30/5/2007 13:06

Well yes growth of course is important ( and my word what a growth phase DOM is currently experiencing )but all contributing factors have to be taken into account to determine the rating.

[techmark] 30/5/2007 12:23

The key is how many shares did they buy back in relation to the 165 million that are now in issue. I suspect that share buy backs will only improve the EPS by 1 or 2%. In my opinion it's the growth of the company that will be far more likely to determine the rating of the shares.

Regards

[trt] 30/5/2007 11:57

Galles,

You are right in that share buy backs will increase the EPS. DOM spent £10.2m on buy backs last year alone.

[techmark] 30/5/2007 11:46

Galles,

You may be right, but in general shares tend to get rated in relation to their growth prospects. It's possible that Domino's will achieve 15% EPS growth for the next 5 years, however even if they did and the shares stood still at 270p for 5 years the stock only returns to a P/E of 15 and a PEG of 1. So there is a lot of good news in there, which you are paying up front for.

Regards

[galles] 30/5/2007 11:22

techmark may be right about investors paying a little too much for the stocks, but taking into account the dividends or even special dividends and potential share buybacks, the EPS should increase with the buybacks and the dividends would pump up the return. It's just a thought, so feel free to comment!

[trt] 30/5/2007 08:49

Remember DOM is opening 50 stores a year to reach an eventual target of 1000 stores with the takeaway market expected to be worth £1.69bn come the end of 2008.
DOM currently delivers 1 in 3 pizza's so will get a huge slice of the return from this growth in takeaway food.

The market is prepared to accept the high PE ratio which will reduce to less than 30 come next year as the increased profits feed through.Many listed companies have a high PE and this is accepted by the market as profits grow and grow.

[techmark] 30/5/2007 08:24

Domino's is a great company and the shares may go higher in the short term. However, I like to look at this way. At 270p a share what level of earnings would bring the shares back to a market P/E of around 15 times. 270/15 = 18p EPS. Currently for this year we are expecting around 7.8p EPS, but with the outperformance probably more like 8-9p EPS. So effectively earnings need to double to bring the stock back to a P/E of 15 times. That's would be 5 consecutive years of 15% EPS growth. That's extremely difficult to achieve, especially as the numbers get bigger. My concern would be that at some point the growth slows to say 10%, then all of sudden people would start questioning why they are paying 30 times for stock that is only offering 10% growth. The rerating back to 20 or even 15 times earnings would be dramatic, knocking 30-50% of the current share price.

I'm not saying it's going to happen, but there's certainly a danger of it. At 270p you are paying a high price for the growth and as pointed out above and only a relatively small slow down in the growth of the company, would have a dramatic effect on the share price.

Regards.

[trt] 29/5/2007 19:45

But what the market doesn't exactly know is the level of outperformance.

Year on year DOM's profits are growing and this year will be be even greater than previous years.

Institutions are still buying - look today at those 3 trades of 75,000 shares each plus one at 53,000.These institutions are topping up ahead of the results no doubt.

Running my winners and topping up my holdings along the way has always served me well over the years especially with DOM

[vassily] 29/5/2007 18:45

The rising price of cheese may impact DOM, so says an article in the Telegraph today.

[indieman] 29/5/2007 18:02

trt,

As techmark has pointed out, people are already aware of the likelihood of outperformance. Domino's expectations are in the public domain and not a secret known only to the few. By definition, that outperformance IS the market expectation now.