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Highlights
- Domino's Pizza Enterprises shares have faced challenges with notable price declines over the last three years.
- Recent investor sentiment shows optimism, as evidenced by a high P/E ratio and insider buying.
- Total shareholder return highlights the importance of dividends in assessing investment value.
Investors who take an interest in the stock market know that there will always be ups and downs. Unfortunately for long-term holders of Domino's Pizza Enterprises Limited (ASX:DMP), the past three years have not been in their favor. Over this period, the ASX consumer stock has plummeted 69%, with the most recent year alone seeing a 35% downturn. The last few months have been especially tough, with a 16% drop further compounded by a 7.8% market dip during the same period.
Diving into the fundamentals, an essential element to consider is the interaction between the company's share price and its earnings per share (EPS). Domino's Pizza Enterprises has encountered an EPS decline at a compound rate of 60% annually over the past three years. Interestingly, the share price's annual compound drop of 32% wasn't as severe as the EPS fall. This suggests shareholders maintain some hope for long-term improvement, a hope reflected in an optimistic price-to-earnings ratio of 190.36.
Another factor catching attention is the company's total shareholder return (TSR), which includes dividends. While the price return for Domino's Pizza Enterprises over three years was a negative 66%, TSR shows a broader picture, highlighting how dividends play a key role in the company's value to investors.
Despite challenges faced in the last twelve months, where broader market gains stood at 4.1%, Domino's Pizza Enterprises' investors experienced a 33% decline, including dividends. Nevertheless, even strong stocks sometimes face a challenging year, and understanding a company beyond market conditions is crucial.
For those considering Domino's Pizza Enterprises, note that the company has four warning signs in the investment analysis that potential investors should examine closely. Additionally, insider activity, which has seen insider buying, is an area to overview for a broader context.
