Domino's Pizza
DPZ
$341.85
+2.24%
Domino's Pizza Inc. is the world's largest pizza chain, operating over 22,100 stores across more than 90 markets, with a business model that is 99% franchised and generates revenue primarily through supply chain sales, domestic store sales, and international franchise royalties. The company holds a dominant market position in the quick-service pizza segment, distinguished by its vertically integrated supply chain and technology-driven ordering platforms. Currently, the stock is under scrutiny due to a surprise CEO transition, slowing sales growth, and a lowered outlook, which have pressured the share price and raised questions about the company's ability to navigate a challenging consumer environment. Additionally, Berkshire Hathaway's new leadership has exited its stake, adding to investor uncertainty about the company's near-term prospects.…
DPZ
Domino's Pizza
$341.85
Related headlines
Investment Opinion: Should I buy DPZ Today?
Based on the analysis, I rate Domino's as a Hold. The stock is attractively valued on a forward basis (16.4x PE) and offers a dividend yield of 1.65%, but the decelerating growth and leadership uncertainty warrant caution. The analyst consensus is a 'buy' with an average target of $380.29, implying an 11.2% upside, which is modest given the risks.
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DPZ 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Domino's is a mature company with a dominant market position, but its growth is slowing, and the recent CEO change adds uncertainty. The valuation is reasonable on a forward basis, but the PEG ratio of 4.6x suggests that the market is still pricing in high growth expectations. The stock could be a value trap if growth continues to decelerate, but it also offers upside if the new leadership can reignite sales. Key factors to watch are same-store sales trends, margin stability, and the new CEO's strategic direction. An upgrade to bullish would require evidence of accelerating growth and a clear turnaround plan, while a downgrade to bearish would be triggered by declining sales and margin compression.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Domino's Pizza's 12-month outlook, with a consensus price target around $380.29 and implied upside of +11.2% versus the current price.
Average Target
$380.29
0 analysts
Implied Upside
+11.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$270 - $450
Analyst target range
The target price range spans from a low of $270 to a high of $450, indicating a wide dispersion in analyst expectations. The high target of $450 implies a potential upside of 31.6% from the current price, likely assuming a successful turnaround under new leadership and a recovery in consumer spending. The low target of $270 suggests a downside of 21.0%, which could materialize if the company faces continued sales declines, margin pressure, or competitive losses. The wide spread between the low and high targets reflects significant uncertainty about the company's future, particularly given the recent CEO change and the departure of Berkshire Hathaway. Recent institutional ratings show no major upgrades or downgrades, with most firms maintaining their previous stances, indicating a wait-and-see approach among analysts.
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Bulls vs Bears: DPZ Investment Factors
Domino's presents a mixed picture: its dominant market position, franchise model, and attractive forward valuation are compelling, but decelerating growth, high leverage, and recent leadership turmoil weigh heavily. Currently, the bear case has stronger evidence due to the stock's 23.5% decline and 44% underperformance versus the S&P 500, coupled with a PEG of 4.6x that suggests the market still prices in optimism. The most critical tension is whether the company can reignite sales growth under new leadership; if it does, the stock could re-rate toward the analyst average target of $380, but if not, it risks falling to the 52-week low of $282. The wide analyst target range ($270-$450) underscores this uncertainty, making the stock a high-risk, potentially high-reward turnaround play.
Bullish
- Strong Franchise Model with 99% Franchised Stores: Domino's operates over 22,100 stores across 90+ markets, with 99% franchised, providing a highly capital-efficient, royalty-based revenue stream. This model generates stable cash flows with minimal capital expenditure, as evidenced by a free cash flow of $654 million TTM.
- Attractive Forward Valuation at 16.4x PE: The forward PE of 16.4x is significantly below the trailing PE of 23.8x, implying the market expects substantial earnings growth. This valuation is reasonable for a company with a dominant market position and a 12.2% net margin, offering potential upside if growth materializes.
- High Analyst Target Upside of 11.2%: The average analyst target price of $380.29 implies an 11.2% upside from the current price of $341.85. With 28 analysts covering the stock and a consensus 'buy' rating, there is a clear expectation of recovery, supported by a high target of $450 (31.6% upside).
- Resilient Gross Margin at 39.95%: Despite revenue growth slowing to 3.5% YoY, gross margin remains solid at 39.95%, indicating pricing power and efficient supply chain management. This margin stability provides a buffer against input cost inflation and competitive pressures.
Bearish
- Revenue Growth Decelerating to 3.5%: Q1 2026 revenue grew only 3.5% YoY, down from 4.5% in the prior year, and sequentially declined from $1,535.7M in Q4 2025 to $1,150.6M. This slowdown suggests weakening consumer demand and intensifying competition, which could pressure future earnings.
- Stock Underperforming S&P 500 by 44%: Over the past year, DPZ fell 23.5% while the S&P 500 gained 20.5%, resulting in a relative underperformance of 44%. The stock is near its 52-week low of $282, reflecting persistent negative sentiment and a lack of investor confidence.
- High PEG Ratio of 4.6x Signals Overvaluation: With a PEG ratio of 4.6x, the stock is expensive relative to its expected earnings growth. This suggests that the market is pricing in aggressive growth that may not materialize, making the stock vulnerable to multiple compression if growth disappoints.
- Negative ROE and High Debt Levels: Domino's has a negative return on equity of -15.4% and a negative debt-to-equity ratio of -1.34, indicating significant leverage and financial risk. The company's high debt burden, with interest expenses of $46.2M in Q1, could constrain future growth and dividend sustainability.
DPZ Technical Analysis
Domino's Pizza is in a clear downtrend over the past year, with the stock price declining 23.5% over the last 12 months, while the S&P 500 gained 20.5% during the same period. The current price of $341.85 sits at approximately 27% of its 52-week range (between the low of $282 and high of $469), indicating the stock is closer to its lows than its highs, which often suggests either a value opportunity or a falling knife. The stock has experienced a maximum drawdown of -41.7% from its highs, reflecting significant bearish momentum.
Beta
0.95
0.95x market volatility
Max Drawdown
-41.7%
Largest decline past year
52-Week Range
$282-$469
Price range past year
Annual Return
-23.5%
Cumulative gain past year
| Period | DPZ Return | S&P 500 |
|---|---|---|
| 1m | +6.9% | +3.6% |
| 3m | +8.0% | +2.7% |
| 6m | -11.1% | +11.4% |
| 1y | -23.5% | +18.7% |
| ytd | -19.6% | +12.3% |
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DPZ Fundamental Analysis
Domino's revenue for the most recent quarter (Q1 2026) was $1,150.6 million, representing a 3.5% year-over-year growth rate, a slowdown from the 4.5% growth seen in the prior year's Q1. The company's revenue growth has been decelerating, with quarterly revenue figures showing a sequential decline from $1,535.7 million in Q4 2025 to $1,150.6 million in Q1 2026, reflecting seasonal patterns but also softer demand. The supply chain segment is the largest revenue driver at $699.0 million, followed by domestic stores at $370.6 million and international franchise at $81.0 million, with the supply chain segment growing at a slower pace due to lower commodity costs.
Quarterly Revenue
$1.2B
2026-03
Revenue YoY Growth
+3.5%
YoY Comparison
Gross Margin
40.4%
Latest Quarter
Free Cash Flow
$654085000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is DPZ Overvalued?
Given that Domino's has positive net income, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 23.8x, while the forward PE is 16.4x, indicating that the market expects significant earnings growth over the next year. The gap between trailing and forward PE suggests that analysts anticipate a substantial increase in earnings, which could be driven by margin expansion or cost savings. The company's PEG ratio of 4.6x implies that the stock is expensive relative to its expected earnings growth rate, which may be a concern for value investors.
PE
23.8x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 19x~39x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financially, Domino's carries a substantial debt load, with a negative debt-to-equity ratio of -1.34, indicating that liabilities exceed equity, a common trait for leveraged buyouts. Interest expenses of $46.2 million in Q1 2026 consume a significant portion of operating income ($230.4 million), leaving less room for reinvestment or dividend growth. The company's negative ROE of -15.4% reflects this leverage, and while the current ratio of 1.65 suggests adequate short-term liquidity, the long-term solvency risk is elevated. Additionally, free cash flow of $654 million TTM is positive, but it could be strained if revenue growth continues to decelerate, as seen in the 3.5% YoY growth in Q1 2026, down from 4.5% a year earlier.
FAQ
The key risks of holding DPZ include: (1) Financial risk from high leverage, with a debt-to-equity ratio of -1.34 and interest expenses of $46.2M per quarter, which could strain cash flows if sales decline; (2) Competitive risk from intense competition in the pizza delivery market, with rivals like Pizza Hut and Burger King investing heavily; (3) Macro risk from a potential recession, which could reduce consumer spending on discretionary items like pizza; (4) Company-specific risk from the CEO transition and the possibility of strategic missteps. The most severe risk is a prolonged sales decline, which could push the stock to the 52-week low of $282 or lower.
The DPZ stock forecast for the next 12 months is mixed. In the base case (50% probability), the stock is expected to trade around the analyst average target of $380, implying an 11% upside. In the bull case (25% probability), the stock could reach $450, a 31.6% gain, if the new CEO successfully turns around sales growth. In the bear case (25% probability), the stock could fall to $270, a 21% decline, if sales continue to deteriorate. The most likely scenario is the base case, with moderate growth and a gradual recovery in sentiment. Investors should monitor quarterly earnings for signs of acceleration or further weakness.
DPZ is fairly valued to slightly undervalued based on forward metrics. The forward PE of 16.4x is below the trailing PE of 23.8x, indicating that the market expects earnings growth. However, the PEG ratio of 4.6x suggests that the stock is expensive relative to its growth rate, which is only 3.5% YoY. Compared to the broader market, the stock's PE is in line with the S&P 500's average, but its high debt levels and negative ROE warrant a discount. The valuation implies that the market expects a recovery in earnings, but if growth disappoints, the stock could de-rate. Overall, the stock is not a bargain, but it is not excessively overvalued either.
DPZ is a good buy for investors with a long-term horizon who are comfortable with near-term volatility. The stock offers a forward PE of 16.4x, which is attractive relative to its trailing PE of 23.8x, and analysts see an average upside of 11.2% to $380. However, the stock has underperformed the market significantly, falling 23.5% over the past year, and faces risks from slowing growth and CEO transition. For risk-tolerant investors, the current price near $342 could offer a value entry point, but it is not a low-risk investment. The biggest downside is a drop to the 52-week low of $282, a 17.5% decline, so position sizing is important.
DPZ is more suitable for long-term investment, given its mature business model and dividend yield of 1.65%. The stock's beta of 0.95 indicates high volatility, making it risky for short-term trading. The company's earnings visibility is moderate, with revenue growth of 3.5% YoY, but the CEO transition adds uncertainty. For long-term investors, the stock could benefit from a recovery in consumer spending and international expansion, but patience is required. A minimum holding period of 3-5 years is recommended to ride out the current turbulence and allow the new strategy to unfold. Short-term traders may find opportunities in the wide price swings, but the risk is elevated.
