One reason for the re-rating is analysts' upgrades in January after bullish comments by the company. But since then, Domino has proved it is stealing a march on its main rival, GEC, by earning a reputation for continuous innovation. A year ago, only one of its wide product portfolio was on the market.
Domino supplies printing equipment that embosses sell-by dates on plastic bottles and prints unique bingo numbers in newspapers. The emphasis on new technology means its customers enjoy greater reliability, while Domino itself enjoys fatter margins. Operating profits jumped 28 per cent in the half-year to pounds 5.3m on the back of sales up only 7 per cent.
Although its UK sales slumped as manufacturing activity declined, Domino is seeing recovery in its Asian markets. Demand for its magazine printers is also booming in France and Finland.
DKB expects pre-tax profit of pounds 15.3m for the full year and earnings of 44.5p. Given the sector is estimated to be on a forward multiple of 17.7, a fair value for the shares would be 788p, making them a strong buy.