Are these food and drink stocks sweet or sour following today’s news?

Royston Wild looks at two edible delights making the news in mid-week trade.

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Shares in pub chain Marston’s (LSE: MARS) have taken a slight hit in Wednesday trading, the stock last 2% lower despite the release of bubbly financials.

The company advised that like-for-like sales at its destination and premium divisions rose 2.3% during the 12 months to September 2016, while underlying takings at its taverns advanced 2.7% from the previous year.

And that’s not the only cause for celebration, with sales of the brewer’s own brand labels striding 13% during the period. The resurgence in ale demand in Britain shows no signs of slowing and should continue to power the top line at Marston’s, as should the company’s ongoing expansion scheme.

The chain opened 22 pubs and six lodges in fiscal 2016, and has plans to open a minimum of 22 pubs and five lodges in the new period. This seems to be a shrewd strategy as both food and drink sales continue to fly higher.

City brokers expect Marston’s to follow a 7% earnings rise in the year to September 2016 with a 4% advance in the current year, resulting in a P/E rating of 9.8 times. This is a little distance below the bargain benchmark of 10 times, and makes the pub chain irresistible value in my opinion.

On top of this, a dividend yield of 5.4% for 2017 rubber-stamps Marston’s as a grossly-undervalued share.

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Pepperoni and pomodoro giant Domino’s Pizza (LSE: DOM) hasn’t so fared so well however, a less positive update pushing the share 4% lower from Tuesday’s close to three-month lows.

That’s not to say latest numbers from Domino’s are catastrophic. Sure, like-for-like sales growth covering the period from June 27 to September 25 may have slowed to 3.9% from 14.9% in the corresponding 2015 period.

But this is hardly a shameful performance given the colossal comparatives the fast food expert faces during the second half. Besides, these latest numbers underline the opportunities created by the massive investment Domino’s has made in its store network and digital operations.

Total UK sales strode 10.5% higher during the three months, to £220.9m, with sales from online channels rising 18.1%. More than four-fifths of all orders in the year-to-date have been made through cyberspace.

Domino’s has opened 51 new outlets so far this year, taking the total to 920. And the success of these stores has prompted the firm to hike its new store target for 2016, from 70 locations to 80. The City certainly believes that these measures should keep the top line trekking higher at a terrific rate, and analysts have pencilled-in earnings growth of 15% and 13% for this year and next.

I reckon the terrific growth trajectory at Domino’s fully justifies elevated P/E ratings of 26.4 times for 2016 and 23.5 times for 2017. Besides, dividend yields of 2.4% and 2.6% for 2016 and 2017 respectively may not be the highest out there but they help take the edge off these heady multiples.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Domino's Pizza. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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