Domino's Pizza Enterprises Ltd.

Missed the estimates for bottom line for FY 18: Domino's Pizza Enterprises Ltd. (ASX: DMP) missed the estimates for annual underlying profit on the back of weaker same-store sales in Europe, Australia and New Zealand. For FY 18, the company has reported underlying net profit after tax of A$133.2 million ($96.84 million), which is below estimates of A$136.6 million from market analysts. The company has also missed company forecasts of a 20 percent rise. For the full year 2018, the same-store sales growth in Australia and New Zealand fell to 4.5 percent, which is below the firm’s recently lowered guidance. Meanwhile, for FY 18, the company has delivered 15.5% rise in Net Profit After Tax (NPAT) to $136.2m and raised its full year dividend by 15.5% to 107.8 cents per share, which is based on growing sales in all markets. Online sales grew by 19.4%, to 63.9% of total Group sales. The company has sold a record of 2 million pizzas and sides in Australia in one week.
 
Further, in 2018, Australian sales performance were affected due to uncertainty prior to the introduction of modern award wages, which is now successfully implemented; and lower than forecast sales in France, that was affected by increased food costs. Additionally, for FY 19, DMP expects same-store sales growth for the group to be in the range of 3% and 6% and this is expected to remain between the same range for the next three to five years. 2019 capital expenditure is expected to be between A$60 million to A$70 million and the group expects to build between 225 and 250 stores for the FY 19. In addition, during the first 5 weeks of FY 19, Group same store sales were +4.4%. As a result, DMP stock has risen 16.55% in three months as on August 27, 2018 but is trading at a high P/E. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of  $ 57.420. This stock is under our radar for a fruitful investment opportunity that may be based on more store roll out and margin expansion in years to come while currently the stock is surmounted by some challenges.
 

FY 18 Guidance Assessment (Source: Company Reports)
 

Webjet Limited

Robust FY 18 Performance: Webjet Limited (ASX: WEB) has reported robust FY 18 with 54% rise in Total Transaction Value to $3 billion, 54% rise in revenue to $291 million, 71% increase in EBITDA to $87.4 million and 30% growth in Net profit after tax (NPAT) to $43.2 million. During FY18, the company experienced strong organic bookings growth with all regions growing significantly faster than their underlying markets. The company had witnessed strong growth in Europe, and is now the #2 player in MEA, and the Americas and Asia both grew significantly during FY 18.  TTV margins expanded largely due to increased size in all regions, as well as more sales from higher margin direct contracts. The FY18 EBITDA result includes the 10-month contribution from JacTravel, as well as increased profitability in the existing WebBeds businesses. Additionally, for FY 19, WEB has reiterated the bookings growth targets for FY19-FY20 for both the B2C and B2B businesses, and it expects bookings growth rates of more than 3 times the underlying market for B2C and more than 5 times the underlying market for B2B. As a result, WEB stock has risen 39.29% in three months as on August 27, 2018 but is trading at a high P/E. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 17.250; and we will again evaluate the trading scenario to identify any probable investment opportunity.

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