How long have you held the stock?
We took a position in DMP at the end of 2011.
What do you like about it?
We like that it is a store roll-out model. It has a proven recipe for success in marketing quick, fresh pizza and has successfully achieved this through technology. DMP has proven to be a quality franchise and its predictable earnings stream gives us high conviction when allocating capital.
How is it better than its competitors?
DMP has been better than its competitors in its ability to listen to their customers and adapt to changing consumer needs and tastes. DMP has been able to successfully adapt its menu to changing nutritional requirements, changing consumer tastes, and changing social norms including the way in which we order and receive food.
All these consumer-focused value-add activities over time have developed into further production efficiencies, which have not only benefited consumers but franchisees and shareholders too.
What do you like about its management?
We like that the management understands not only its customer, but also its franchisees. The management team comes from the franchise industry. Many of the team have been franchisees. Due to this experience, management have been able to develop a proven track record of executing an organic and acquisitive rollout/conversion of DMP stores in almost every corner of the world.
What is your target price?
We do not have price targets. We buy or sell based on our expected risk-adjusted relative return within the portfolio over our five-year investment horizon.
At what point would you sell it?
When the Internal Rate of Return falls below our threshold — which is the risk-free rate plus an equity risk premium. Other reasons to sell may be due to a significant change in the management team or a change to the business model.
How much has it added (or subtracted) to your overall portfolio over the last 12 months?
Over CY2016, DMP added 13.8%. This performance was despite a particularly difficult time for high-PE stocks.
Is it a liquid stock?
Where do you see the value?
The value of DMP lies in its OneDigital platform, which has been described by Don Meij as the engine of Domino’s. Most underestimate the power of the productivity advantage that this platform brings. Simply, it’s the digital version of the old-world franchisee ‘how to’ manual, and more.
Source: Yahoo!7 Finance
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