The Domino's Pizza Enterprises Ltd (ASX: DMP) share price has dropped 20% since February 1, earning the quick service restaurant chain a speeding ticket from the ASX.
The share price fell from $60.60 to $48.56 on Friday 5th February, but Australia's largest pizza chain said it had no explanation for the fall. Since then, shares have recovered somewhat, to close at $52.56 today.
A possible driver of the share price fall is an article by our own Joe Magyer published in the Australian Financial Review (AFR) in mid-January 2016.
Joe highlighted the P/E ratio which at the time was 'a nosebleed mark of 77.5x', making shares incredibly expensive, even by Domino's own high standards. Today's P/E is not that much different – a slightly lower but still expensive 72x. Even using forecast consensus earnings per share of 96 cents for the 2016 financial year puts the share price on a P/E ratio of 54.5x.
Go ahead and buy their pizzas, but you might want to think twice before buying Domino's shares at this price.