Domino's share price down 58% in 2022 but here's 30% off your pizza

Shareholders have received discount vouchers to use until 1 December 2023.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Domino's share price is down 58% in 2022 
  • The end of lockdowns and rising inflation and interest rates are impacting the share price 
  • The company has just sent out 30% discount vouchers to shareholders for use until 1 December 2023 

The Domino's Pizza Enterprises Ltd (ASX: DMP) share price is down 58% in the year to date.

As my colleague Zach recently reported, Domino's shares are now trading around 52-week lows.

At the time of writing, the Domino's share price is $52.12, not far above its 52-week low of $49.83.

It's been a tough ride for shareholders. But at least you'll get a discount on your next order.

30% discount on pizza for shareholders

Domino's is offering its shareholders a 30% discount on all large premium and traditional pizzas.

The deal, called 'Shareholder Pizza Perks', was sent out last week.

Shareholders received a personalised discount code to use on up to 25 orders between now and 1 December 2023. There is a minimum $22 spend on delivery orders.

Dominos share price struggles through 2022

Domino's had a fantastic run during the first two years of COVID-19.

Lockdowns meant more people ordered in, which pushed up Domino's earnings and shares. The Domino's share price reached an all-time high of $164 in September 2021.

Domino's was among a bunch of ASX shares that were COVID winners. But lockdowns were a short-term tailwind, so the share price has come back to Earth.

Before COVID hit, Domino's shares were trading at about $62 apiece. Today, they're trading considerably lower than that arguably because of two new challenges — rising inflation and interest rates.

Both stop consumers from spending, and inflation raises the costs of production, meaning a smaller margin for Domino's even if it raises its pizza prices.

Domino's reported a 4.6% bump in sales globally in its FY22 results released in August. But it experienced a 12.5% decrease in after-tax profit to $165 million.

As my colleague, Zach points out, this is a classic impact of inflation. Businesses enjoy greater revenue because they're selling their products for higher prices. But they're also paying more for the inputs to make those products, which can reduce their margins and hence their earnings.

What else is happening at Domino's?

In August, Domino's shelled out $214 million to buy 287 corporate stores in three new markets – Malaysia, Singapore, and Cambodia.

Investors liked the move and the Domino's share price moved up 7.2% on the day of the announcement.

Back on 23 September, Zach reported that brokers were still advocating Domino's shares.

Seven out of 14 analysts were recommending Domino's as a buy and seven were recommending to hold, according to Refinitiv Eikon data.

The consensus price target from those 14 brokers was $79.57, down from $89.35 in June.

Citi, for one, is bullish. The broker has a price target of $84.40 on Domino's shares.

If Citi is right, then investors buying into the pizza chain today are in for a gain of almost 65% over the next 12 months.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Dominos Pizza Enterprises Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Happy man on a supermarket trolley full of groceries with a woman standing beside him.
Consumer Staples & Discretionary Shares

$10,000 invested in Coles shares one year ago is now worth…

Atop its 3.2% dividend yield, Coles shares have posted impressive gains over the year.

Read more »

Happy young couple doing road trip in tropical city.
Consumer Staples & Discretionary Shares

What are Macquarie's top ASX All Ords picks in the automotive sector?

Some of these shares could be zooming higher according to the broker.

Read more »

A happy farmers sifts his fingers through grain, indicating a good crop and higher prices.
Consumer Staples & Discretionary Shares

Why GrainCorp is Macquarie's top pick in the ASX agriculture sector

GrainCorp is Macquarie’s top ASX Ag stock pick and for good reason.

Read more »

a man inspects a capsicum while holding an eco-friendly green string bag in a supermarket produce aisle.
Consumer Staples & Discretionary Shares

Coles shares: Buy, hold, or sell?

Three investment experts offer their take on the outlook for Coles shares.

Read more »

A man stands with his arms folded in front of banks of unused poker machines in a darkened gaming room.
Consumer Staples & Discretionary Shares

Does Macquarie see more upside for these ASX gaming shares?

Macquarie expects a 42% upside from one of the stocks.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Consumer Staples & Discretionary Shares

Why are Lovisa shares jumping 6% today?

Let's see what was announced to the market this morning.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Consumer Staples & Discretionary Shares

PointsBet share price frozen amid takeover update

Is a superior proposal on the way?

Read more »

High fashion look. glamor closeup portrait of beautiful sexy stylish Caucasian young woman model with bright makeup, with red lips, with perfect clean skin.
Consumer Staples & Discretionary Shares

Is the consumer discretionary sector back in favour after interest rate cuts?

One broker has named its best buys.

Read more »