On Tuesday, the Domino's Pizza Enterprises Ltd (ASX: DMP) share price came under pressure.
Investors were selling the ASX 200 share after its long-serving CEO, Don Meij, announced his exit. In addition, a softer than expected quarterly update weighed on sentiment.
This led to the pizza chain operator's shares ending the session 6% lower at $31.60.
In light of this, the Domino's share price is now down 40% since this time last year.
Does this make this beaten down share a cheap buy now? Or should investors steer clear? Let's find out.
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Is this a cheap ASX 200 share to buy?
It's not often that a CEO steps down and analysts are happy. But according to the team at Goldman Sachs, they think that the exit of Domino's CEO should be viewed as a positive and a reason to buy.
Firstly, commenting on the ASX 200 share's trading update. The broker said:
DMP provided 17 weeks trading update with -1.2% SSS (+2.7% pcp), weaker vs GSe +2.8% 1H25e. That said, historically SSS can be divergent to sales/average store and our network sales (including store closures) for 1H25e is -0.9% and the Company did not provide an update to that. The key issue in our view remains the longer than expected turnaround of Japan and Europe (France and Germany).
As for Meij's exit, Goldman thinks that this is a positive step towards business turnaround. It adds:
Separately, we see Mr Don Meij's (CEO of 22yrs) retirement as not surprising as we believe the recent appointment of France and ANZ regional leadership removed the daily operational reliance on Mr Meij.
Meanwhile, given challenges faced by the company in its strategy execution over the past several years, including our view of over-expansion post COVID especially in Japan, under-investment in front-end consumer tech, and menu innovation resulting in market share losses, we think the management change could provide an opportune time for new leadership to revisit key growth strategies for a turnaround. Despite the operating volatility, we see the change in leadership as a positive step towards business turnaround.
Time to buy
In response to the above, the broker has retained it buy rating and $40.00 price target on the ASX 200 share.
Based on its current share price of $31.60, this implies potential upside of almost 27% for investors.
In addition, Goldman is forecasting a dividend yield of approximately 3.7% in FY 2025. This takes the total potential return beyond 30%.
