The Domino's Pizza Enterprises Ltd. (ASX:DMP) share price fell 12% to $44.94 today – after briefly falling as low as $40 – after the company released its annual results.
Domino's shares could have dived for a variety of reasons, but my guess is the primary reason was that the company failed to hit guidance given at the half year:
I thought it was pretty good of the company to acknowledge its performance in this way rather than selectively minimising or only reporting the positive metrics. Elsewhere, the company announced that it was beefing up its national audit team, doubling in size to tackle allegations of underpayment of wages in the franchise network. Early results have recovered $0.7 million in unpaid wages and superannuation, although Domino's notes that it has targeted perceived high-risk stores first, and the results may not be extrapolatable across the whole network. It is expected that a full audit will take another 5 months to complete.
With Domino's acknowledging and working to improve on several concerns that have made the company a target of short-sellers, plus today's decline in price, the company could be worth a closer look. It might be worth investigating further if Domino's shares continue to get sold off.
