Dominos is following in the footsteps of Nanosonics with shares down a brutal 30% today. For many of us in microcap land these kind of drawdowns aren't that rare, but we're talking about multi-billion dollar companies here!

Amazing.

After market close yesterday, the pizza maker reported a 1.3% lift in same store sales, and a 8.8% jump in total network sales for the first half.

BUT, things weren't great in Asia which reported a 8.9% drop in same store sales, and a 1% pull back from the preceding half. Moreover, pre-tax profit for the first half is expected to be between $87-90m, a 15%-odd drop from the previous corresponding period (but up a bit on H2 FY23).

The company is talking about cost cutting, and was quick to point out that Aus/NZ had its best period in 6 years. Still, the market isn't having any of it.

On a trailing 12 month basis, the company has a PBT of about $163m. Let's call that $114m in net profit. So prior to today, shares were on a P/E of 44x, and are (at time of writing) on a trailing P/E of about 31x.

That seems tame relative to the Nanosonics' multiple, but it's another sign that the market has no tolerance for growth stocks that aren't, well, growing..

December half net profit was down 9.2% due to "one-off" legal and store refurbishment costs. On an underlying basis, NPAT was up 8.4% to $68.2m.

Network sales were 14.6% higher while online sales were up 16.5%

70% of revenue and half of EBITDA comes from overseas (Europe and Japan)

Same store sales up 3.3%

Lots of new stores opening, with more to come in second half. Taregt for store opening in Japan lifted.

Guidance slightly lowered for the full year, but EBIT growth should be around 14%.

Results presentation here

Dominos has delieverd a net profit of $121.5m, up 18.1% but below guidance for $136.8m.

Excluding one-offs, profit was up 15% on sales growth of 7.5%.

The outlook for the current year is for 10-20% EBIT growth, which was also below market expectations.

Same store sales growth was likewise strong, and the company said it expected 7-9%pa in network growth and 3-6%pa in same store sales growth, on averaghe, over the next 3-5 years.

All in all, these are very good numbers, even if the market was hoping for more (and the company guiding for much better). And the company remains optimistic of further substantial store growth -- looking to double this by 2025.

But the fact is that shares are on ~30x earnings and the growth rate is clearly slowing. Even if it does achieve it's targets, applying some basic assumptions still shows average annual sales growth of ~9% or so. Given that's likely to slow further as geographies become more saturated, and therefore make it more difficult for Dominos to support a high market multiple, I find it difficult to see value at these levels.

Full results presentation is here

See my forecast page for more