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Cutting our losses on Dominos Pizza and Dignity

Discuss Stock buying Shares, tips and ideas for stock market dealing
TheMotorcycleBoy
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Re: Cutting our losses on Dominos Pizza and Dignity

#190712

Postby TheMotorcycleBoy » January 3rd, 2019, 7:29 am

I'm still not regretting our DOM sale. I switched on RNS alerts to my email from them back in November last year. Since then I have had at least 16 separate mails all with the subject "TRANSACTION IN OWN SHARES":

This is one of the first I got:
 
Domino's Pizza Group plc (the "Company") announces that on 12 November 2018 it purchased the following number of its ordinary shares for cancellation:
Class of shares
Ordinary shares of 25/48p ("shares")
Number of shares purchased  100,000
Average purchase price paid 283.90 pence per share
Highest purchase price paid 293.50 pence per share
Lowest purchase price paid  277.70 pence per share
...

Amazingly, despite their operating base being in revolt, they are still buying them now:

Domino's Pizza Group plc (the "Company") announces that on 2 January 2019 it purchased the following number of its ordinary shares for cancellation:
Class of shares
Ordinary shares of 25/48p ("shares")
Number of shares purchased 125,000
Average purchase price paid 235.27 pence per share
Highest purchase price paid 237.40 pence per share
Lowest purchase price paid 232.10 pence per share

It looks as if each tranche is about 100k-125k of shares in size. Not that I've really been taking notes (though the appearance of yet another mail alerted me this morning to write).

I also have RNS alerts from BOY (bodycote), NXT (next), MSLH (marshalls) but I don't seem to be receiving buy-back notifications from any of those, despite in the case of the first two: flagging market price and in the case of MSLH good cash flow and EBIT growth.

My conclusion is DOM really is run by a total idiot, all they have is their brand name, and the share-purchases are money very badly spent, i.e. instead of on unifying their infrastructure, rewarding their workers, and hence greasing the wheels of future growth.

Or am I missing something?

Matt

Dod101
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Re: Cutting our losses on Dominos Pizza and Dignity

#190715

Postby Dod101 » January 3rd, 2019, 7:46 am

I do not know if you are missing something or not Matt, but a number of points spring to mind. Firstly obviously for a company to buy back its own shares they need to have access to the cash to do it. They also need to take account of the current level of borrowings, whether the shares are selling below their intrinsic value, if the management is being judged on EPS and so on. There are many factors to consider when a company buys back its own shares and it does not necessarily mean that the company is being run by idiots. Many highly successful companies buy back their own shares, eg Unilever, HSBC and Royal Dutch Shell to name but three.

Secondly, and more importantly, you have sold Domino's. I would simply move on if I were you. Do not dwell on it unless you know the company well enough to say 'If the share price drops to xxxxp I might consider buying back in'. That in my experience is not usually a good idea because you may well be buying a falling knife.

Dod

TheMotorcycleBoy
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Re: Cutting our losses on Dominos Pizza and Dignity

#190720

Postby TheMotorcycleBoy » January 3rd, 2019, 8:16 am

Dod101 wrote:I do not know if you are missing something or not Matt, but a number of points spring to mind. Firstly obviously for a company to buy back its own shares they need to have access to the cash to do it. They also need to take account of the current level of borrowings, whether the shares are selling below their intrinsic value, if the management is being judged on EPS and so on. There are many factors to consider when a company buys back its own shares and it does not necessarily mean that the company is being run by idiots. Many highly successful companies buy back their own shares, eg Unilever, HSBC and Royal Dutch Shell to name but three.

Secondly, and more importantly, you have sold Domino's. I would simply move on if I were you. Do not dwell on it unless you know the company well enough to say 'If the share price drops to xxxxp I might consider buying back in'. That in my experience is not usually a good idea because you may well be buying a falling knife.

Dod

Thanks for this Dod,

I take your point. I probably need to "unsubscribe to their RNS feed!".

thanks mate
Matt

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Re: Cutting our losses on Dominos Pizza and Dignity

#190774

Postby GoSeigen » January 3rd, 2019, 12:15 pm

TheMotorcycleBoy wrote:I'm still not regretting our DOM sale. I switched on RNS alerts to my email from them back in November last year. Since then I have had at least 16 separate mails all with the subject "TRANSACTION IN OWN SHARES":

Or am I missing something?

Matt


Normally I'd view this as bullish, but I've been wrong many times, also DOM doesn't look especially cheap and the chart is poor. 160-180p looks a good place to start buying, if it gets there...


GS

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Re: Cutting our losses on Dominos Pizza and Dignity

#190825

Postby TheMotorcycleBoy » January 3rd, 2019, 3:09 pm

Hi GS,

Help me out with this a minute, mate...

GoSeigen wrote:also DOM doesn't look especially cheap and the chart is poor. 160-180p looks a good place to start buying, if it gets there...

When you say not especially cheap, are you just roughly gauging that from their P/E ratio? (Not critical - just curious).

And what did you mean when you said that "the chart is poor" ?

thanks Matt

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Re: Cutting our losses on Dominos Pizza and Dignity

#190842

Postby ADrunkenMarcus » January 3rd, 2019, 3:44 pm

Last time I looked, DOM's free cashflow yield was showing as over 6.5%, or a share price over 15 times free cash flow. Its current management is not optimal, but that can be corrected. In the long term, growth will slow and it should therefore reward shareholders with dividends. However, I do think international and UK expansion has some way to go yet.

Best wishes

Mark.

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Re: Cutting our losses on Dominos Pizza and Dignity

#190877

Postby GoSeigen » January 3rd, 2019, 7:03 pm

TheMotorcycleBoy wrote:Hi GS,

Help me out with this a minute, mate...

GoSeigen wrote:also DOM doesn't look especially cheap and the chart is poor. 160-180p looks a good place to start buying, if it gets there...

When you say not especially cheap, are you just roughly gauging that from their P/E ratio? (Not critical - just curious).

And what did you mean when you said that "the chart is poor" ?

thanks Matt


P/E, price to revenue. I can't claim to understand the balance sheet -- there appear to have been acquisitions or other capital reorganisations -- so 60m equity vs 1bn market cap! !00m of the assets are intangibles. I just don't like the look of all that...

My fer to the chart is TA discussion of which is banned on the investment boards; suffice to say, a double top has completed with target price around 140p. Many consider this gobbledegook; I myself take it with a huge pinch of salt but there you go...


GS

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Re: Cutting our losses on Dominos Pizza and Dignity

#190880

Postby TheMotorcycleBoy » January 3rd, 2019, 7:12 pm

Cheers mate,

Sorry to be pedantic...
GoSeigen wrote:My fer to the chart is TA discussion

does "fer" mean "reference?"

GoSeigen wrote:a double top has completed with target price around 140p.

This got me really confused! What do you mean exactly?

sorry to pester you etc. and thanks for your patience!

(Edit: PM me if it's banned/controversial for this board or whatever)

Matt

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Re: Cutting our losses on Dominos Pizza and Dignity

#190887

Postby GoSeigen » January 3rd, 2019, 7:52 pm

GoSeigen wrote:
My fer to the chart is TA discussion of which is banned on the investment boards; suffice to say, a double top has completed with target price around 140p. Many consider this gobbledegook; I myself take it with a huge pinch of salt but there you go...


GS


Apols for spelling and grammar in my last post. Knocked that one out before dinner and my fingers seemed befuddled for some reason: "price" came out as "birse" at one point!

GS

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Re: Cutting our losses on Dominos Pizza and Dignity

#190905

Postby dspp » January 3rd, 2019, 10:07 pm

GoSeigen wrote:
GoSeigen wrote:
My fer to the chart is TA discussion of which is banned on the investment boards; suffice to say, a double top has completed with target price around 140p. Many consider this gobbledegook; I myself take it with a huge pinch of salt but there you go...


GS


Apols for spelling and grammar in my last post. Knocked that one out before dinner and my fingers seemed befuddled for some reason: "price" came out as "birse" at one point!

GS


Chartists or TA or tea leaf reading are all allowed, likewise chicken guts. Seriously, this is a place to discuss Sectors & General Shares: Share Ideas and whatever you think works should be splayed on the deck and used to assist. In this part of TLF all we are interested in is what you think, and provided you set out the reasons clearly then you are welcome. Whatever sniffiness TMF used to have about charts has no place here.

Personally I am not a hard-core charter, but you'd be super-foolish not to take a peek from time to time before contemplating a big move in or out. All I need to know is that other people think they matter, and on that basis then I have to take them into account.

[this is me wearing my Mod hat by the way: you are all welcome here, however you do it]

regards, dspp

TheMotorcycleBoy
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Re: Cutting our losses on Dominos Pizza and Dignity

#190931

Postby TheMotorcycleBoy » January 4th, 2019, 5:57 am

Thanks for that post, DSPP. With GS's blessing I may well repost the essence of a PM.
I can't argue that, in the least, it's interesting to note how well approximate patterns in the TA envelope figures pointed to by various FA valuations.

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Re: Cutting our losses on Dominos Pizza and Dignity

#198072

Postby Spet0789 » January 31st, 2019, 11:15 pm

My wife just bought some DOM at 255p. It’s been on the radar for a long time. A 40% RoCE, FCF yield >5%, dividend yield >3.5% and a nice business model works for her. Hopefully one to hold for ever.

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Re: Cutting our losses on Dominos Pizza and Dignity

#198075

Postby ADrunkenMarcus » January 31st, 2019, 11:27 pm

Spet0789 wrote:My wife just bought some DOM at 255p. It’s been on the radar for a long time. A 40% RoCE, FCF yield >5%, dividend yield >3.5% and a nice business model works for her. Hopefully one to hold for ever.


I'm annoyed I didn't have the funds to top up when it was at over 6% FCF yield! Held since 2010.

Best wishes

Mark.

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Re: Cutting our losses on Dominos Pizza and Dignity

#198124

Postby Spet0789 » February 1st, 2019, 11:00 am

ADrunkenMarcus wrote:
Spet0789 wrote:My wife just bought some DOM at 255p. It’s been on the radar for a long time. A 40% RoCE, FCF yield >5%, dividend yield >3.5% and a nice business model works for her. Hopefully one to hold for ever.


I'm annoyed I didn't have the funds to top up when it was at over 6% FCF yield! Held since 2010.

Best wishes

Mark.


Any thoughts on XPP? I know we both hold RSW and there are similarities I think.

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Re: Cutting our losses on Dominos Pizza and Dignity

#198161

Postby GoSeigen » February 1st, 2019, 1:20 pm

Dominos still looks like a seller to me. If the price keeps falling, especially below 220p, don't be tempted to average down. Rather wait for price to establish itself above 300p, confirming your buy and leaving your initial position in profit.

All IMO, feel free to gloat if I'm proved wrong.


GS

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Re: Cutting our losses on Dominos Pizza and Dignity

#198219

Postby Spet0789 » February 1st, 2019, 5:18 pm

GoSeigen wrote:Dominos still looks like a seller to me. If the price keeps falling, especially below 220p, don't be tempted to average down. Rather wait for price to establish itself above 300p, confirming your buy and leaving your initial position in profit.

All IMO, feel free to gloat if I'm proved wrong.


GS


Fair advice.

I try not to average in on downmoves but rather see how the company performs and buy more if operational performance improves and the price is about the same or worse.

TheMotorcycleBoy
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Re: Cutting our losses on Dominos Pizza and Dignity

#198364

Postby TheMotorcycleBoy » February 2nd, 2019, 11:40 am

I still ponder this share, I note it hit 280 again the other day. But they (In my naive newbie opinion!!) are still preferring to spend surplus cash on share buybacks than improving their operations:

https://www.investorschronicle.co.uk/ti ... anchisees/ (sorry this may require that you are subscriber)

And why is flogging pizzas such a "moat" business? We are out in the sticks, but the small town 1.5 miles away, already has 3-4 pizza sales/delivery outfits and none of them are DOM. Surely the market is saturated? Their product is *not* a quality pizza either, it's doughy rubbish, to accompany a piss up for teenies + 20-somethings (if I rightly recall.... :lol: ).

Matt

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Re: Cutting our losses on Dominos Pizza and Dignity

#198388

Postby Charlottesquare » February 2nd, 2019, 2:01 pm

What happens to discretionary spending (Pizzas) if Brexit really is a No Deal mess, if household disposable incomes suffer surely so do all fast food type operations?

I personally would be more cautious these days until I saw what was likely to happen, perhaps that is merely my risk averse nature.

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Re: Cutting our losses on Dominos Pizza and Dignity

#198392

Postby SalvorHardin » February 2nd, 2019, 2:20 pm

Charlottesquare wrote:What happens to discretionary spending (Pizzas) if Brexit really is a No Deal mess, if household disposable incomes suffer surely so do all fast food type operations

In the last recession takeaway food sales generally rose. People cut back on going out and substituted takeaway meals. Dominos saw sales rise substantially in 2009

"The company has always recognised that the pizza business does well when times are hard, and has taken full advantage of the drop in advertising rates to continue to promote its discounts and deals to a cash-strapped public"

https://www.theguardian.com/business/20 ... -recession

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Re: Cutting our losses on Dominos Pizza and Dignity

#198413

Postby ADrunkenMarcus » February 2nd, 2019, 4:07 pm

Spet0789 wrote:Any thoughts on XPP? I know we both hold RSW and there are similarities I think.


I've never looked at XPP so have nothing useful to say, sorry.

Yes, I hold Renishaw as well. Purchased in October 2011, its share price has gained 386.2% for a CAGR in the share price of 21.9%. The dividend has grown 7.7% CAGR and reached a 6.9% yield on book cost: dividends received amount to 37.5% of book cost.

Operating margin averaged over 20% since 2000 and was 25.1% in 2018. Return on capital employed similar. One to hold for the long term and add to when its out of favour, such as 2009 or 2011.

Best wishes

Mark.


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