Domino's Share Price Evaluation

DMP:AU Domino's Pizza

Investment Summary

Capital Structure

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Capital Structure

WACC= (re*we)+(rd[at]*wd)

* Long term debt = 468

* Equity= $104 916

* Total Value of Firm = $105,384

* Wd = 468/105,384 = 0.44%

* We = 104916/105384= 99.55%

* WACC = 6.663%

Equity Capital

* Re = 6.64% (CAPM: 3.93 + 0.677x3.99)

* Beta = 0.6797

* Market Risk Premium= 3.99%

* Rf (risk free rate) = 3.93%

Debt Capital

* Rd = 734/15544 = 4.72%

* Rd (after tax) = 6.63 x 070 = 4.64%

* T = Corporate tax rate of 30%

Using the three stage dividend discount model we value the share price of [DMP:AX] at $AUD 12.1072, with a WACC of 6.63%. The market price as of April 30th 2012 is $ AUD 9.85, so we can stay that stock is slight undervalued. We would suggest a buy recommendation of the stock, and hold. As company will continue to rally with its new approach to innovation, use of social media, value and pizza innovation, we can expect Domino’s Pizza to continue to grow as it has despite the volatile and worsening economic climate.

| 2007 | 2008 | 2009 | 2010 | 2011 |

Cash Flows from Operations | | | | | |

Net Income | $9.1 | $11.8 | $15.4 | 17.8 | 21.5 |

Depreciation Expense | $6.8 | $6.2 | $6.4 | $8.0 | $8.7 |

Decrease/(Increase) in Accounts Receivable | $17.8 | $1.6 | ($1.5) | ($1.5) | ($3.1) |

Decrease/(Increase) in Inventories | $3.6 | ($1.5) | $0.1 | ($0.1) | $0.7 |

Decrease/(Increase) in Other Current Assets | ($0.6) | $2.8 | ($5.8) | $2.5 | $0.0 |

Increase/(Decrease) in Accounts Payable | $14.1 | $1.0 | ($1.9) | ($0.7) | $5.2 |

Increase/(Decrease) in Other Current Liabilities | ($3.3) | $1.0 | $1.6 | $1.4 | ($0.3) |

Increase/(Decrease) in Deferred Income Taxes | $0.4 | ($0.4) | $0.0 | $0.0 | $2.1 |

Increase/(Decrease) in...