Domino's shares slide as Morningstar trims FY25 estimates
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The news: Shares in Domino's Pizza trimmed more than 3% as Morningstar reduced its FY25 earnings and dividends estimates on the pizza chain.
The numbers: Domino's shares were down 3.5% to $34.75 by 3:15pm AEDT, having surged more than 20% on Friday after the company announced the closure of 205 loss-making stores.
Morningstar lowered its full-year earnings-per-share (EPS) estimate by 20% to $1.33. It forecasts a dividend per share (DPS) of $1.07.
The research house also cut its long-term estimate for Domino's global store footprint by 3% to 5,800, around 20% below the company's previous long-term target.
Morningstar retained its fair value estimate for Domino's at $58.
The context: Morningstar said the store closures marked a setback to Domino's network expansion plans. However, Morningstar director Johannes Faul said lower EPS and DPS estimates are immaterial to the fair value estimate, and earnings estimates from FY26 remain unchanged.
Faul noted that Domino's shares "screen as cheap", with the market extrapolating recent softer same-store sales growth and a slower store rollout, and underestimating the "massive growth" in the group's global network.
The source: Morningstar research
