Equities update

Domino’s acquires Shorecal, profits in line

Mark Crouch, analyst at investment platform eToro, says “Despite the backdrop of inflation observed in the last year, Domino’s remains committed to delivering value to its shareholders, evidenced by a 5% dividend increase. As these input costs ease, we expect improvements in the bottom line, contributing to the ambitious growth plans for new stores in the UK and Ireland. The takeaway market is arguably the most competitive it has ever been, yet the UK’s largest pizza chain has taken measures to adapt, including joining other delivery platforms to maximise its exposure.

“However, the headline is the acquisition of the remaining shares in their Irish franchisee Shorecal. Whichever way you slice it, this move represents a significant cash outflow from the balance sheet, which has led to a dip in shares this morning”

Persimmon’s woes linger as profits halve amid market challenges

 
Adam Vettese, analyst at investment platform eToro, says “Persimmon’s latest set of results will make for tough reading for shareholders after the UK housebuilder reported a 52% drop in profits in 2023, citing build cost inflation and weaker demand hampering performance. Also, the company’s cash position, while still relatively healthy, has fallen considerably.

“Persimmon shares looked to be mounting a recovery in the last six months, rallying over 40%, and after what has been a torrid few years for the housebuilder, investors would have been eager to see this continue at pace. However, as these results indicate, so much depends on factors outside of Persimmon’s control.

“With interest rates still up at around 5%, this has created something of a standoff between buyers and sellers in 2023, with neither willing to give any ground. The Spring Budget offered little to no incentive for either side, so the focus will now be firmly fixed on the Bank of England and the prospect of impending interest rate cuts later this year.”