Mid-Cap

One Consumer Services Stock May Face Resistance at Current Level – DMP

March 01, 2024 | Team Kalkine
One Consumer Services Stock May Face Resistance at Current Level – DMP

DMP:ASX
Investment Type
Mid - Cap
Risk Level
Action
Rec. Price (AU$)

This report is an updated version of the report published on 1 Mar 2024 at 4:21 PM AEDT.

Domino’s Pizza Enterprises Limited (ASX: DMP)

Domino's Pizza Enterprises Limited is an Australia-based company, which is engaged in the operation of retail food outlets and the operation of franchise services.

Recommendation Rationale – SELL at AUD 45.100

  • Profit Booking: DMP’s share price has breached the Resistance 1 recommended on 12 February 2024, and offered a profit booking opportunity.
  • Overvalued Multiples: On a forward 12-month basis, key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are higher than the median of Consumer Cyclicals sector.
  • Profit Decline: During H1 FY24, EBIT and NPAT declined by 5.3% and 13.0% YoY, respectively.
  • Key Risks: DMP’s performance is exposed to a recent decline in offline carry-out orders, increased labour costs, restructuring expenses, geopolitical issues, among others.

DMP Daily Chart

Valuation Methodology: Price/Earnings Approach (FY June'24E) (Illustrative)

The stock has crossed the resistance 1 level mentioned above and may witness selling pressure before scaling further upside. Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 45.100, at 10:05 AM AEDT, as of 1 March 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 4 March 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.



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