Broker snap: Facts Domino from FinnCap

30th Mar 2010 12:42

Broker FinnCap has been waxing lyrical about the Domino's Pizza business model after the pizza delivery firm announced another strong set of trading figures on Tuesday morning, despite going up against tough comparative figures from a year ago.The secret of the company's success is certainly not down to the pizzas, but rather, in FinnCap's view, in 'the franchisee experience and economics, and the ability to provide these people with a slice of the good life.''By providing a franchisee with a licence for a particular territory or area for 10 years, finance to help buy capital equipment, a franchise consultant to advise and assist, Domino's believes £280,000 is enough to start your own mini pizza empire,' FinnCap explains. 'Additionally, on a store with average net turnover of £13,000 per week, payback will be approximately three years, assuming nil borrowing.'FinnCap thinks that as long as people keep eating pizzas and the franchisees 'keep making money from our love of take away while watching TV gold like "Britain's Got Talent", this will remain a core long term holding.''It is "Two-for-Tuesday" today at Domino's, so buy a pizza and some shares,' FinnCap suggests.KBC Peel Hunt is also a fan of the stock, though the company's view of the pizzas is unknown. The broker has put an extra topping on its target price for the stock, raising it from 390p to 400p, and suggests that the new commissary at West Ashland, scheduled to be fully operational at the end of the next quarter, may drive earnings upgrades in May.