Pizza maker and franchisor Domino's Pizza Enterprises Ltd. (ASX: DMP) hit a new all-time high of $29 this morning as investors take to its prospects of growing in the giant Japanese market.
Shares have rocketed in value over the last year after the group nearly doubled revenues in financial year 2014 to $588.7 million, with underlying earnings growing by 70% to $95.1 million.
While Japan offers Domino's investors big growth potential its success and growth outlook in the core Australia and New Zealand markets continue to place upward pressure on the share price.
Innovation
Behind the success of this business it its innovative approach to growing online sales and customer numbers.
Domino's is delivering a recipe that works and as Australia's most successful digital retailer it's ready to use whatever tactics are necessary to persuade consumers to open their wallets.
The group has tapped into the power of social media like no other, with more than 1 million Facebook Fans in Australia alone being regularly reminded of its pizza deals. It has also launched its Pizza Mogul digital platform to help increase sales, increase the average order size, and improve customer engagement.
Promotional pricing, voucher systems and a focus on image improvement are other kinds of tactics that are leaving Domino's competition in the dust. The shift online also means staff spend less time taking orders on the phone and more time making pizzas for its hordes of customers, who expect their pizzas delivered faster than it takes to oven-cook one at home.
These kinds of incremental efficiencies and innovations in the digital space mean big cost benefits to the business, which filter through to the bottom line and shareholder returns.
Outlook
Domino's is forecasting earnings growth in the region of 20% for financial year 2015 while trading on around 43x analysts' estimates for earnings per share in 2015. With a price to earnings growth (PEG) ratio more than 2 the stock is certainly in the expensive bracket, but remains one of the Australia's best growth businesses.
