Despite a solid run over the last couple of weeks, the Domino's Pizza Enterprises Ltd. (ASX: DMP) share price is still down by almost 31% since the turn of the year.
Is it time to invest in the pizza chain operator?
I think it is. Although Domino's disappointed the market in FY 2017 when it fell short of its full-year guidance, I think the sell-off that ensued was largely overdone.
With management expecting earnings to rise 20% in FY 2018, the sell-off has left its shares changing hands at approximately 28x estimated forward earnings.
I think that this is great value for a company with such strong long-term growth prospects.
At present Domino's has 2,135 stores in operation, but management aims to more than double its footprint to 4,650 stores by 2025.
The majority of this growth is expected to come from the European market. Currently the company has 865 stores in Europe, but plans to grow this to 2,600 with eight years.
In the near-term management intends to add up to 200 new stores to its network in FY 2018.
This, together with the expectation of positive same-store sales growth across all regions, gives me confidence to believe that Domino's will deliver a strong result this year that will lead to improvements in investor sentiment.
All in all, I expect this to take the Domino's share price higher over the next 12 months, making it a great option for investors alongside industry peer Collins Foods Ltd (ASX: CKF).
