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Just to answer the headline question right off the bat – yes, a big part of what happened to Domino’s (ASX:DMP) all-time high is that lockdowns ended, and at-home-to-your-door comfort food suddenly fell out of vogue. I accept that.
A mix of genuine value propositions, heavy inflows of new investors, and more than probably boredom on the part of well-versed investors all came together to push Domino’s price to its all-time high of $160 a share.
Ignoring COVID, the all-time-high was 2016
The best point in Domino’s history, in terms of share prices, thus becomes August 2016 when shares nearly hit $76.
Today, they’re worth $40.
One-year performance is down 44.94 per cent; YTD losses on returns of 31.95 per cent.
Domino’s underperformed the ASX200 by 46 per cent on a one-year basis. Not helping matters was a big blunder in its European operations last year.
To put it simply, Domino’s wasn’t as well-liked in the Eurozone as it expected.
This was particularly true for Denmark, where consumers were so turned off by the idea of Australian chain pizza that many Danish pizza fans just cold-shouldered an entire multinational until Domino’s had to shut down 27 stores.
Novelty status
The company was always an odd one to list on the Australian stock exchange, but once it listed in 2005, the company slowly – but steadily – kept adding value to shareholders.
Once it became clear that the stock was going to be taken seriously whether the market liked it or not, it became a staple for many portfolios that had a bit of consumer discretionary flair.
These days – maybe not for much longer. Currently, 10 brokers rate DMP a ‘Buy’; four a ‘Hold’, and, three a ‘Sell’. Probably wait to see if that changes next week.
What happened today?
DMP shares sunk a further 30 per cent today as the company shared bad news in a trading update.
The company expects revenue to be less than the prior year, and for brokers, that’s all they need to hear.
An earnings miss is never good news for a stock, and clearly, that signal has some contagion effect to it.
Curiously, Domino’s pointed to “pricing missteps in response to inflationary pressures, helping to rebuild franchisee profitability”.
DMP shares last traded at $39.83.
