Thrift store

This ASX 200 stock fell 16% in the first 3 days of November, and a manager made secondhand buys

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The Domino’s Pizza Enterprises Ltd. (ASX: DMP) The stock price has seen a lot of volatility over the past few weeks and months. But, a director saw an opportunity with the S&P/ASX 200 Index (ASX: XJO) share.

In 2022 to date, Domino’s stock price has fallen approximately 50%. It was a painful time for shareholders.

Not only is the business affected by widespread concern about high inflation and rising interest rates, but it is also losing the boost it received from the shutdowns as more people ordered home delivery.

What’s happening with Domino’s stocks now?

During the first three trading days of November, Domino’s stock price fell more than 16%.

On November 2, 2022, the food industry held its Annual General Meeting (AGM).

The company reminded shareholders that in FY22, network sales increased 4.6% to $3.92 billion and underlying earnings before interest and taxes (EBIT) fell 10.5% to $262.9 million.

In FY22, it organically added 294 new stores, representing a 10% network increase. It also acquired 156 stores and expanded into its tenth market, Taiwan.

However, investors may have been confused by the FY23 trade update. Domino’s said that year-to-date, network sales were down 1.8%, with same-store sales down 1%. However, in October, comparable store sales increased 1.6%.

Domino’s said that after a difficult first quarter, as expected, sales improved in October. It is expected to end FY22 in the medium-term outlook of 3% to 6%.

So far, it has added 41 more stores in FY23.

However, inflation will test earnings. Management expects net profit after tax (NPAT) growth in FY23.

The company intends to set a new network expansion record in FY23, aiming to break the FY16 record of 484 stores.

Director investment

Yesterday it was announced that director Tony Peake’s pension fund had added 1,600 Domino’s shares via a market trade.

The cost of those 1,600 shares was $53.71 per share, which means the total cost was about $86,000.

Remember that before this investment, his wife owned 1,400 shares and the pension fund owned 1,000 shares. Thus, the investment significantly increased the position of the family.

I think it’s worth taking note when directors buy stock in their company. Because it may indicate that they believe Domino’s stock price is a good value and that the company has a bright future.

Insane takeaways

After the sharp decline in the ASX 200 stock valuation, Domino’s stock price is valued at 31x estimated FY23 earnings and 24x estimated FY24 earnings, according to CommSec. This price could be much more digestible for investors, especially if the company can continue to grow its same-store sales and store network.