Why this broker downgraded the Domino’s (ASX:DMP) share price

This market darling’s shares have been downgraded…
The post Why this broker downgraded the Domino’s (ASX:DMP) share price appeared first on The Motley Fool Australia. –

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is pushing higher on Tuesday.

In early trade, the pizza chain operator’s shares are up 1.5% to $157.80.

This means the Domino’s share price is now up 79% since the start of the year.

Can the Domino’s share price keep rising?

Unfortunately, the Domino’s share price could be fully valued now according to one leading broker.

According to a note out of Bell Potter, its analysts have downgraded the company’s shares to a hold rating with a $155.00 price target.

The broker is a big fan of the company and believes it is well-placed for growth over the medium term. This is due to its significant organic growth prospects, with management aiming to more than double its store network to 6,650 by FY 2033 across existing territories.

Bell Potter also expects the company to make acquisitions in adjacent markets, expanding its store network further.

However, it felt its valuation was getting stretched after its recent run. For example, it notes that the Domino’s share price was trading at 50x estimated FY 2023 earnings and 40x estimated FY 2024 earnings prior to today’s session.

Bell Potter commented: “DMP has been one of our preferred stock picks through the pandemic amongst our consumer facing coverage. Following DMP’s strong share price performance, we recently removed DMP as a preferred pick in our retail sector note dated 3 September.”

“With the stock trading at FY23e/FY24e PE ~50x/~40x, we have also now downgraded our rating from Buy to Hold with an unchanged 12-month price target of $155.00,” the broker added.

All in all, the team at Bell Potter appear to believe that investors would be best waiting for a decent pullback in the Domino’s share price before considering an investment.

The post Why this broker downgraded the Domino’s (ASX:DMP) share price appeared first on The Motley Fool Australia.

Should you invest $1,000 in Domino’s right now?

Before you consider Domino’s, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Domino’s wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

The Domino’s (ASX:DMP) share price has hit another new 52-week high
Another day, another Dominos (ASX:DMP) share price all-time high
3 ASX 200 shares hitting fresh all-time highs on Monday

How to turn $20,000 into $475,000 in 10 years with ASX shares

3 quality ASX growth shares analysts rate as buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!