The Domino's Pizza Enterprises Ltd. (ASX: DMP) share price has suffered a huge decline over the past six months with the shares being put through the oven once again today.
The DMP share price hit an all-time high of $80.69 on 18 August, 2016, marking an enormous increase from the price of roughly $3.50 it traded at 10 years ago.
But it was difficult to justify the share price when it hit its peak, just as it arguably continues to do today.
Although the pizza maker reported a solid increase in same-store-sales and net profit, and even upgraded its full-year earnings guidance in today's earnings report, the market still slammed the shares 14.4% lower.
Indeed, the shares closed today's session at $53.56, which marks a total decline of 33.6% since hitting that peak six months ago and 16.4% since the beginning of this week.
Here's what that looks like in chart-form:
Although the shares have come off the boil, they still aren't cheap. In fact, based on today's guidance of 32.5% net profit growth in financial year 2017, NPAT could grow to around $122 million which would equate to around $1.37 in earnings per share. That is slightly below the consensus forecast by analysts, according to Yahoo! Finance, which could help to explain today's sharp drop in the share price.
However, even after that decline, the shares are still trading on a forecast price-earnings ratio of more than 39x. In addition, it is facing the prospect of rising employee costs which investors may also be struggling to bake into their valuations.
Foolish Takeaway
Domino's Pizza Enterprises has endured a tough run as of late. But before you go rushing into a decision to buy it while it's down, it may be worth simply watching from the sidelines, for the moment at least, and looking at other alternatives instead.
