2 ASX Stocks that lately underperformed – DMP and NVT

ASX Stocks - Kalkine

Domino’s Pizza Enterprises Limited (ASX:DMP), a consumer discretionary stock with the largest Pizza Chain in Australia, is engaged in the operation of franchise services and retail food outlets. The ASX listed stock has been hit with bad news as the stock went into reverse due to the weaker than anticipated international sales of the parent group. 30 per cent of the parent group’s international sales is accounted for by the Australian counterpart and Domino’s Pizza Enterprises then sends royalty cheques back to Domino’s Pizza International.

Following the US jolt, in the morning trade as at August 08, 2018, Domino’s Australia’s stock fell 3 percent. In terms of recent performance, the same store revenue was at 4 percent as compared to the predictions of growth of 5.1 percent. The CEO pointed out the growth factor as, more orders, than higher prices were noted. The store growth expectations were between 6 percent and 8 percent over the next 3-5 years, but the growth was at just 1.2 percent in the second quarter. International disappointment was also blamed on some leadership changes in several markets. The Domino’s stock was trading at a market price of $50.520 with a daily price change of $0.46 or 0.919% (as at August 09, 2018, early trade) and has seen a performance change of -5.49% over the past 12 months. The annual dividend yield for the company is 2.02% which is 40% franked. The company’s market capitalization currently stands at $4.34 billion. At the moment, negative sentiments prevail around the group and there may be better growth options than DMP to look at.

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Navitas Limited (ASX:NVT) is also under the consumer discretionary sector. The company is into provisioning of pre-university and university programs for domestic and overseas students. Through its principal University partnership segment, it provides pathway programs to students requiring university education. Following the increased demands in Australia, New Zealand, and Canada education business, FY18 enrollments grew by 6%, which is boosted by the international students.

Navitas’ stock was trading at a market price of $4.180 with a daily price change of -$0.01 or -0.239% (as at August 09, 2018, early trade) and was down 2% a day before. It has seen a performance change of -3.49% over the past 12 months. The company reported results including $10.1m contribution from closed colleges in FY17 and $123.8m C&I rationalization charges in FY18. The lower NPAT led to a drop in full year dividend, which was declared to be 17.4 cps (as compared to 19.5 cps FY17). This represents approximately 90% of normalized free cash flows and earnings per share. The company’s total enrolments increased 6% over FY18, and Swansea college converted to a joint venture and 5 royalty contracts were renewed. The annual dividend yield of the company is 4.05% which is 70% franked. The company’s market capitalization currently stands at $1.54 bn.

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