The Turnaround Trilogy: Three Companies Betting on a Reset
Three ASX companies are running turnaround stories at very different stages. DMP is fairly priced after four CEO changes. OML offers 80% upside. SXL shows 275% but carries the highest execution risk.
Turnarounds are the most seductive stories in equity markets because the narrative writes itself: new management, a credible plan, depressed expectations, and the promise that the worst is behind. The uncomfortable truth is that most turnarounds fail, or take longer and cost more than anyone projected at the outset. Three ASX-listed companies are currently running some version of this story, and our analysis suggests the market has priced each one very differently.
Domino's Pizza Enterprises (ASX: DMP) has cycled through four CEOs in 24 months and closed 312 stores across its global franchise network. At A$20.84 versus our fair value of A$20.64, the market has already absorbed the operational improvement and is waiting for same-store sales to confirm the recovery. oOh!media (ASX: OML) operates Australia's largest out-of-home advertising network, generating 16.4% return on invested capital and growing revenue 8.8%, yet trades at A$1.00 against a fair value of A$1.67 because the market appears to double-count A$936 million in lease liabilities. Southern Cross Austereo (ASX: SXL) is the earliest-stage and most binary of the three: a traditional radio broadcaster pivoting to digital audio, trading at A$0.84 against a fair value of A$3.15, a 275% gap that is wide enough to be compelling and wide enough to be wrong.
The common thread is not sector or business model but the relationship between operational progress and market recognition. DMP has made the most progress and received the most credit. OML has a fundamentally sound business that the market is mispricing on a technicality. SXL has the widest gap and the longest road, with return on invested capital still below cost of capital, meaning the business has not yet demonstrated it can create economic value at scale.
Scorecard
| Company | Rating | Price | Fair Value | Gap | Quality | ROIC | Key Turnaround Metric |
|---|---|---|---|---|---|---|---|
| DMP | HOLD | A$20.84 | A$20.64 | -1% | 6/10 | 9.9% | Franchisee EBITDA A$103K/store (3-year high) |
| OML | BUY | A$1.00 | A$1.67 | +67% | 7/10 | 16.4% | Revenue +8.8%, record 16.4% OOH media share |
| SXL | BUY | A$0.84 | A$3.15 | +275% | 6.7/10 | 5.2% | EBITDA +34.4% on 5% revenue growth |
DMP: The Reset That Has Already Been Priced
Domino's Pizza Enterprises holds the master franchise rights to the Domino's brand across 12 markets in ANZ, Europe, and Asia, earning royalties from roughly 3,300 franchised stores and supplying those stores through its own commissary network. The turnaround context is stark: four CEO changes in 24 months, 312 store closures to rationalise an over-expanded network, and same-store sales that remain negative in every region except Europe. The management credibility score of 5.6 out of 10, the lowest of the three companies in this article, reflects the instability at the top rather than the operational evidence on the ground.
That operational evidence is genuinely encouraging. H1 FY26 showed EBITDA margins (earnings before interest, tax, depreciation and amortisation, as a percentage of revenue) expanding to 15.6% as cost discipline took hold, and franchisee earnings reached A$103,000 per store, a three-year high that matters because franchisee profitability is the leading indicator in any franchise system. Europe proved the anti-discounting strategy works: same-store sales turned positive at 1.3%, European EBIT grew 23%, and both Germany and the Netherlands have normalised, leaving France as the primary remaining drag. The pattern in franchise systems is that franchisee profitability leads same-store sales recovery by two to four reporting periods, which points to an ANZ inflection around mid-FY27 if the historical relationship holds.
The valuation arithmetic at A$20.84 versus fair value of A$20.64 is straightforward: the market has priced the operational improvement. Our base case DCF produces A$21.23 with 55% probability. The bull case at A$26.24 (20% probability) requires same-store sales recovery across all regions, the permanent CEO (expected August 2026) accelerating the strategic plan, and Europe continuing to demonstrate margin expansion. The bear case at A$12.29 (20% probability) requires a combination of failed same-store sales recovery and an adverse outcome in the SRP France litigation, a EUR279 million unprovisioned legal claim that sits entirely on the balance sheet. The severe case at A$4.64 (5% probability) models a full litigation loss combined with structural decline in franchisee economics.
The SRP litigation alone drives 65% of the gap between the bull and bear scenarios. Domino's argues the claim is defensible, and management has provided no settlement timeline. An adverse ruling at the full amount would reduce equity value by roughly A$4 per share after tax and could simultaneously trigger goodwill impairments in France and strain debt covenants. At A$20.84, investors are carrying that binary legal risk with minimal margin of safety, and the current EV/EBITDA (enterprise value divided by earnings before interest, tax, depreciation and amortisation) multiple of 9.3x sits roughly 34% below the five-year average of approximately 14x. A re-rating to even 12x requires confirmed same-store sales recovery, which has not yet arrived.
The moat is narrow rather than durable: legal exclusivity via master franchise agreements rather than a structural economic advantage. ROIC (return on invested capital, measuring how much profit a business generates relative to the capital employed) at 9.9% barely covers the 9.8% cost of capital, meaning the business is currently creating near-zero economic value. The incoming permanent CEO's first strategic plan in November 2026 will signal whether the reset accelerates or stalls. The founder's 25.66% owner-operator stake keeps management disciplined, but discipline and the ability to generate above-cost-of-capital returns are different things, and DMP has not yet demonstrated the latter in this cycle.
Revenue is forecast to contract 4.5% in FY26 to approximately A$2.2 billion before recovering modestly at 3% annually, with EPS declining from A$1.26 in FY25 to A$1.22 in FY26 before recovering to A$1.29 in FY27. The dividend yield at fair value is forecast at 3.6% for FY27, partially franked at 35-40%. Net debt is declining steadily toward 1.5x EBITDA by FY28, which keeps the balance sheet out of crisis territory regardless of the legal outcome.
The turnaround verdict: the operational reset is working, the stock already reflects it, and value emerges below A$17 where the margin of safety accounts for both litigation risk and the possibility that same-store sales recovery takes longer than the two-to-four period historical average suggests.
OML: Undervalued by an Accounting Distortion
oOh!media operates Australia and New Zealand's largest out-of-home advertising network, selling advertising space across more than 30,000 billboards, transit panels, airport displays, and retail screens. Advertisers pay for access to audiences in high-traffic locations; oOh! pays concession rents to the asset owners (councils, transport authorities, and shopping centre landlords) and earns the margin in between. The turnaround story here is less about a broken business and more about a mispriced one: CY25 results delivered 8.8% revenue growth to A$691 million, adjusted EBITDA of A$139 million at a 20.1% margin, and a record 16.4% share of Australian agency media budgets. Free cash flow nearly doubled to A$28 million.
The valuation anomaly rests on a methodological dispute. The market appears to include A$936 million in AASB 16 lease liabilities within enterprise value when calculating trading multiples. Those lease liabilities represent future concession rents that are already deducted from the reported EBITDA figure. Including them in enterprise value while simultaneously using an earnings figure that has already absorbed the cost creates a double-count: the same rent expense is effectively penalising the valuation twice. On a lease-exclusive basis (which is the correct treatment when rents are already reflected in the earnings metric), oOh! trades at 4.7x adjusted EBITDA, roughly half the 10-12x typical of global outdoor advertising peers such as JCDecaux and Clear Channel.
ROIC at 16.4% sits well above the 10.6% weighted average cost of capital (WACC, the blended rate a company must earn to satisfy both debt holders and shareholders). That 580 basis point spread between returns and cost of capital is the widest of the three companies in this article, and it indicates a business that is genuinely creating economic value at the current level of investment. Revenue visibility is strong: 60% of revenue is locked to contracts expiring CY29 or later, the Transurban and Melbourne Metro Tunnel pipelines provide identifiable growth through CY27, and billboards and transit (two-thirds of revenue) grew 10.5% in CY25 as digital panel conversion lifted yields. Airports and offices surged 23%, recovering fully from post-pandemic lows.
Our base case DCF produces A$1.80 per share with 55% probability. The bull case at A$2.13 (10% probability) requires the market to adopt the lease-exclusive valuation framework more broadly, airport and office growth to sustain double-digit rates, and EBITDA margins to hold above 19%. The bear case at A$1.35 (25% probability) reflects the scenario where the market's current valuation framework persists indefinitely, treating lease liabilities as financial debt. Even in the bear case, A$1.35 implies 35% upside from the current A$1.00 price, which is the kind of downside protection that narrows the range of outcomes in the investor's favour. The probability-weighted expected value across all scenarios is A$1.63.
The new CEO introduces execution uncertainty, and the retail format declined 5.7% in CY25 with no disclosed remediation plan, which is the one genuine operational blemish in an otherwise clean result. Gross margins are expected to compress slightly in CY26, from 43.2% to around 42.5%, as the Auckland Transport contract revenue rolls off and new contracted assets carry higher initial ramp costs. EBITDA margins step down from 20.1% to 19.0%, reflecting this mix shift rather than any loss of pricing power. Free cash flow is forecast to nearly double to A$54 million in CY26 as growth capex stabilises and working capital normalises.
The balance sheet is conservatively geared at 0.8x bank debt to EBITDA. The fully franked dividend yields 6.25% at the current price, which means investors are paid a genuine income return while waiting for the valuation framework to adjust. Management credibility scores 7 out of 10, reflecting solid operational delivery offset by the new CEO's limited track record at oOh! specifically.
At A$1.00 versus fair value of A$1.67, the 67% gap is driven primarily by an accounting methodology debate rather than deteriorating fundamentals. The risk is that this framework never changes and the stock remains permanently cheap. The offset is that the 6.25% fully franked yield, 16.4% ROIC, and contracted revenue visibility through CY29 provide a floor that most accounting disputes do not come with.
SXL: The Widest Gap, the Hardest Pivot
Southern Cross Austereo operates 104 radio stations across Australia (the Hit Network and Triple M brands) alongside the LiSTNR digital audio platform, commanding 36.7% of the commercial 25-54 demographic, the audience segment that drives the majority of advertiser purchasing decisions. The company divested its television assets to focus entirely on audio, and FY25 results showed the operational leverage inherent in a business with a 65% fixed cost structure: EBITDA grew 34.4% to A$71 million on revenue growth of just 5% to A$422 million. EBITDA margins expanded 360 basis points from 13.2% to 16.8%.
The digital transformation milestone in FY25 was LiSTNR achieving profitability for the first time, with digital audio revenues growing 28.8% to A$45 million and 2.4 million users on the platform. Digital now accounts for 10.7% of total revenue, up from effectively zero five years ago. The platform offers on-demand content, live streaming, and podcast partnerships, with 70% of digital campaigns incorporating targeting components that improve advertiser return on investment by 30-40% versus traditional radio placement. Management guides to FY26 revenue of A$435-440 million and EBITDA of A$78-83 million, implying continued margin expansion.
The market prices SXL at A$0.84 and our analysis values it at A$3.15, a 275% gap that is the widest of the three and warrants scepticism about both sides of the argument. Our valuation uses multiple methodologies: the base case DCF produces A$3.10 per share (35% weight), the probability-weighted DCF produces A$3.38 (15% weight), transaction multiples produce A$3.42 (20% weight, anchored to ARN's acquisition of Grant Broadcasters at 9.2x EV/EBITDA and Nine's Fairfax Radio purchase at 8.8x), and trading multiples produce A$2.41 (15% weight). The convergence of DCF approaches with transaction comparables at A$3.10-3.42 increases confidence in fundamental value, while the divergence from the A$2.41 trading multiple suggests market mispricing rather than a valuation error.
The bull case rests on digital audio revenues growing from A$45 million to A$113 million by FY30 (roughly 20% compound annual growth), EBITDA margins expanding to 18.8%, and the market re-rating the business from a declining radio company to an integrated audio platform. Our model forecasts revenue growing at a 4.8% compound annual rate through FY30, with digital audio reaching 22.4% of total revenue mix as LiSTNR scales from 2.4 to 4.1 million users. Traditional radio revenues are projected to stabilise around A$390-395 million annually, with market share gains offsetting industry decline of 1-2% per year. Each 1% change in the revenue compound annual growth rate affects fair value by approximately A$0.30 per share, which illustrates how sensitive the valuation is to the growth trajectory.
The structural constraint the market is pricing, and not unreasonably, is that ROIC at 5.2% remains below the 7.2% WACC. That gap means the business is currently destroying economic value on an incremental-capital basis: every dollar reinvested earns less than the cost of that capital. Our model forecasts margins expanding to 18.8% by FY28 and ROIC crossing above WACC by FY28, but that forecast requires sustained execution over three to five years. The bear case at A$1.85 (15% probability) models traditional radio declining faster than the 1-2% annual rate assumed in our base case, with global competitors such as Spotify eroding LiSTNR's local content advantage. Even in the failure scenario, strategic asset values (broadcast licenses alone are worth over A$200 million) and cash generation capabilities provide a floor above the current price.
The competitive moat is narrow but identifiable: broadcast license ownership creates regulatory barriers with high replacement costs, audience leadership at 36.7% creates advertiser dependency with 85% retention rates, and the integrated platform strategy enables cross-selling that pure-play digital competitors cannot replicate locally. The moat strength rating of 7.2/10 with 5-7 year durability reflects spectrum scarcity and the cost of replicating a 104-station network, offset by the reality that digital distribution reduces the long-term value of spectrum exclusivity.
Net debt to EBITDA has improved from 1.87x to 1.10x, and dividends resumed in FY25 at 4 cents per share (a 4.8% yield at A$0.84), with interest coverage at 9.4x and total liquidity of A$92 million. The balance sheet is not the concern. The concern is whether the market will ever re-rate SXL from a declining radio company to an integrated audio platform, and the honest answer is that this re-rating requires digital revenues to reach a scale where they materially change the growth profile visible in headline numbers. At 10.7% of revenue today, digital is a promising signal rather than a proven transformation.
Management credibility scores 7 out of 10 overall, with CEO John Kelly demonstrating strong execution through the television divestment and digital platform development, and an 85% historical guidance achievement rate. The quality score of 6.7/10 reflects solid but not exceptional fundamentals that still require continued execution to reach the level where the valuation gap closes on its own.
What Would Change Our View
More optimistic on DMP: Same-store sales turning positive in ANZ for two consecutive halves would confirm that the franchisee profitability recovery is translating to volume, validating the historical two-to-four period lead relationship. Each 1% improvement in same-store sales adds approximately A$1.50 per share to fair value through the multiple re-rating it would trigger. Europe continuing to demonstrate margin expansion, with France normalising as Germany and the Netherlands already have, would provide a second geography confirming the anti-discounting strategy. Resolution or settlement of the SRP litigation at a fraction of the EUR279 million claim would remove the binary risk that currently accounts for 65% of the gap between bull and bear scenarios, worth approximately A$4 per share in the adverse case.
More optimistic on OML: Broader market adoption of the lease-exclusive valuation framework, particularly by sell-side analysts covering the stock, would be the single largest catalyst, as the apparent multiple would re-rate from a compressed level to the 10-12x peer range. Each turn of EV/EBITDA multiple expansion at current earnings adds approximately A$0.25 per share. Australian media revenue tracking above 7% growth through CY26, as the early weeks of the year suggest, would confirm that the structural rotation from broadcast to out-of-home is accelerating rather than plateauing. A disclosed remediation plan for the retail format, which declined 5.7% in CY25, would address the one operational gap the current result leaves unanswered. Airport and office formats sustaining double-digit growth through CY27 as corporate travel fully normalises would support EBITDA margins closer to 20% than the 19% we forecast.
More optimistic on SXL: LiSTNR reaching 3 million users by March 2026, ahead of the trajectory implied by current growth rates, would validate that digital adoption is accelerating. Digital revenues exceeding 20% of total mix by FY27, rather than our modelled FY30 target of 22.4%, would force a re-evaluation of the growth profile and the multiple it deserves. ROIC crossing above WACC (currently 5.2% versus 7.2%) by FY27 rather than our forecast FY28 would be the single most important fundamental catalyst, as it would mark the point where incremental investment creates rather than destroys value. Each 200 basis points of EBITDA margin improvement above our forecast affects fair value by approximately A$0.52 per share. Industry consolidation, with recent transaction multiples of 8.8-9.2x EBITDA for comparable Australian radio assets, would provide a floor well above the current share price.
Shared downside risks across all three: A renewed inflation shock forcing the RBA above 3.85% would pressure all three businesses through different channels. DMP faces direct demand compression in a consumer discretionary category where same-store sales are already negative. OML faces advertiser confidence withdrawal, given the 1.8x GDP beta of advertising spending, which could push revenue growth toward 3-4% and EBITDA below A$130 million. SXL faces the same advertising cyclicality with higher operating leverage, meaning the 65% fixed cost base that amplifies revenue growth on the way up amplifies revenue declines on the way down. A sustained ASX correction would also compress OML's and SXL's trading multiples further, delaying any re-rating regardless of operational progress. For DMP specifically, the SRP litigation remains an idiosyncratic risk that no macro environment can offset: a full adverse ruling at EUR279 million could subtract A$4 per share after tax from any scenario.
Bottom Line
These three turnarounds sit at distinctly different stages, and the market has priced them with corresponding levels of confidence.
DMP is the most advanced: the cost programme has delivered, franchisee economics at A$103,000 per store are at a three-year high, and Europe has validated the anti-discounting strategy with positive same-store sales and 23% EBIT growth. The market has acknowledged this by pricing the stock at fair value, with the remaining catalysts being ANZ same-store sales turning positive and the incoming permanent CEO setting the strategic direction from November 2026. At A$20.84, the stock offers minimal margin of safety against either the SRP litigation or a slower-than-expected same-store sales recovery. Value emerges below A$17, where the discount accounts for litigation risk and gives the recovery thesis room to play out over the two-to-three years it may require.
OML is the most straightforward value case. The business is not broken: 16.4% ROIC, 8.8% revenue growth, 60% contracted revenue visibility, record share of agency media budgets, and a 6.25% fully franked dividend yield. The discount stems primarily from an accounting methodology dispute over lease treatment, not deteriorating fundamentals. At A$1.00 versus fair value of A$1.67, even the bear case of A$1.35 implies 35% upside. The entry point that aligns risk and reward is the current price: investors are paid 6.25% fully franked to wait for either the valuation framework to adjust or the operational results to force a re-rating regardless of the accounting debate.
SXL is the earliest stage and the most binary. The 275% gap reflects the market treating Southern Cross as a declining radio business, while our analysis prices the digital transformation optionality that FY25 results are beginning to evidence. The operational leverage is genuine (34.4% EBITDA growth on 5% revenue growth proves the fixed cost thesis works), and LiSTNR's profitability milestone validates the digital strategy at an early scale. But ROIC below cost of capital means the business is not yet creating economic value, and the gap between A$0.84 and A$3.15 requires sustained execution over three to five years to close. The entry point for investors willing to underwrite that execution risk is below A$1.00, where the price is supported by strategic asset values, improving cash generation, and a balance sheet that has already de-levered from 1.87x to 1.10x net debt to EBITDA.
Analysis generated by the Alpha Insights AI research pipeline. All fair values are point estimates subject to model uncertainty. This is not financial advice. Do your own research before making investment decisions.