Domino's Pizza Group PLC (LSE:DOM), the UK’s master franchise, may need to offset softer-than-expected demand with margin growth and store openings as it shifts into the new financial year, analysts reckon.
Weak delivery demand in the fourth quarter has left Shore Capital analysts cautious that sales in the transition between the two financial years could be “softer than expected”.
However, the broker is confident strong unit openings and second-half cost-driven margin improvements “can more than offset modest downside sales risk”.
Analysts believe this could pose an upside risk and therefore maintain a “buy” rating for the stock.
Looking forward, Shore Capital expects Domino’s Pizza to issue guidance that targets earnings per share growth of 12% or more and total system sales growth of 10%.
In 2025, Domino’s could see EPS grow by 17% as it continues to shave costs and up demand, led by a “CEO hungry for more”.
Domino’s Pizza Group is down around 3% in the year-to-date at around 361p.