Domino’s Pizza shares (ASX: DMP) fell by 5.08% in today’s session, hitting a new 52-week low of $22.23 before ending the day marginally higher at $22.25. Bearish sentiment has been building, in what has undeniably been a challenging period for holders of the pizza giant. The latest low stands in stark contrast to DMP’s all-time high of AUD 167.15 in September 2021, with a look at the 5 year chart highlighting what has been a difficult few years. Recent performance has been no better, with the share price declining by 24.29% since the start of this year, and an even more concerning 42.30% over the past 12 months.

The recent performance is attributed to a confluence of factors, including leadership changes, analyst downgrades, earnings concerns, and exclusion from key market indices. The resignation of Kerri Hayman, CEO of Domino’s Australia and New Zealand, after a 37-year tenure with the company, has added to the uncertainty surrounding the company’s leadership. This change comes after just nine months in the CEO role, raising questions about the company’s strategic direction. Hayman’s departure follows the closure of 80 underperforming stores in Japan in July 2024, signaling broader issues within the company’s international operations.

Analysts’ concerns regarding Domino’s store rollout strategy, particularly in the Asian market, exacerbated the situation. A key issue highlighted is the persistent challenge of franchisee profitability, which remains below the levels seen in fiscal year 2021, casting doubts on Domino’s future growth prospects.

Adding to the financial woes, Domino’s trailing price-to-earnings (PE) ratio stands above 125. While the forward PE ratio of ~17 suggests expectations for improved earnings, the current figure raises concerns about the company’s present profitability. While Domino’s declared a dividend of A$0.555 per share in March 2025, yielding 3.7%, the sustainability of this dividend is questionable, given the payout ratio of 778% of earnings and 85% of cash flows. Such high payout ratios raise serious concerns about the company’s ability to maintain dividend payments in the long term, especially if earnings do not improve significantly.

DMP being removed from the ASX 100 Index in March 2025 further underscored its declining market capitalization and eroded investor confidence, with ETFs and the like that track the index no longer needing to hold Domino’s. But could tax loss selling also be a bigger part of the picture?

 

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Some analysts seem to believe that to be the case, with DMP’s financial year loss making it an ideal company for institutions to take the loss with the tax year looming closer. Especially so, with the ASX 200 having gained more than 8.4% over the past year. This has made loss making names even more vulnerable to the strategy, with others on the list such as MinRes also notably moving lower. Fundamentals at Domino’s have not meaningfully shifted since the last set of financials, and there has been no major news catalysts in recent weeks to account for the amplified selling, so this could well be something that eases post July.

With the shares down at levels not seen in 10 years, downwards pressure is clear, and it would be a very risky move to try to call a bottom. Watching for a bounce above near term resistance, or a reversal that has strong volume would be our first sign to start watching closer.

The next earnings date for is estimated to be at the end of August, and markets will be closely watching to see if the company can deliver on its promises of improved earnings. The coming months will be critical for Domino’s as it navigates these challenges and attempts to regain investor confidence. Plenty to address in the near term, with the company’s ability to adapt to the changing market dynamics likely  crucial in determining its long-term success.