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Domino s Pizza still Delivering on Time

Article By: ,  Financial Analyst
July 23, 2012 11:50 AM

Domino’s Pizza continues to be an investment favourite after the fast food pizza chain reported like for like sales growth of 5.2% for the first half of the year, compared to a sales growth of 2.4% a year earlier.

Overview of results:

- Like for like sales growth for the group 5.2% (UK sales +5.7%)
- Profit before tax, excluding Germany, increased 15.2% to £23.3m
- Diluted Earnings per Share (EPS), excluding Germany, increased 16.1% to 10.68p
- Interim Dividend +20% to 6.60p per share

The results themselves help to confirm that Domino’s has taken advantage of a number of factors that increased its customer base and sales, namely austerity and sporting occasions. With the UK now back in a double dip recession and anaemic earnings growth, diners are increasingly choosing to eat in and Domino’s has clearly benefitted from this changing social variable.

The recent EURO 2012 international football tournament has likely helped the firm also, and one can expect that the launch of the London 2012 Olympic Games will also benefit sales too.

Are these results of any surprise however? Perhaps not.
It doesn’t take a rocket scientist to come to the conclusion that when consumers have less disposable income and have restricted spending habits, firms such as Domino’s I likely to take advantage.

But it is not just the economic environment that has benefitted the pizza chain.

Innovations have also helped to increase the speed of purchase. The firm said that online system sales rose 43.4%, accounting for 52.4% of all UK delivered sales and of those online purchases, 17.9% of orders were completed via a mobile device.

Share price outperformance
Domino’s shares price has rallied a rather superb 26% so far in 2012, which is a significant outperformance of other firms in the restaurant/bars sector.

Shares have now hit the top end of its long term trading range at 520p, and it is indeed this level where shares have sold off from this morning so this week’s performance will need to be watched for any signs of a reversal.

Consistent closes above the 520p level is going to be important for upwards momentum to continue to help prices target a new record high above 591p.

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