Domino's Pizza
DPZ
$347.44
-1.37%
Domino's Pizza Inc. is the world's largest pizza chain, operating over 22,100 stores across more than 90 markets through a 99% franchised model, with revenue primarily generated from its vertically integrated supply chain and franchise royalties. As a dominant player in the quick-service restaurant industry, Domino's distinct competitive advantage lies in its efficient supply chain network and technology-driven ordering platform. The current investor narrative is centered on the stock's significant decline from its 52-week high, driven by a surprise CEO transition, disappointing Q1 2026 sales and earnings, and broader consumer spending headwinds, though some analysts see value in the pullback given the company's long-term market leadership.…
DPZ
Domino's Pizza
$347.44
Related headlines
DPZ 12-Month Price Forecast
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 $386.74 and implied upside of +11.3% versus the current price.
Average Target
$386.74
0 analysts
Implied Upside
+11.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$270 - $522
Analyst target range
Domino's is covered by 26 analysts, with a consensus recommendation of 'Buy' (mean recommendation 2.0 on a 1-5 scale where 1 is Strong Buy). The average target price is $387.42, implying approximately 16.4% upside from the current price of $332.97. The distribution leans bullish, with recent ratings from Evercore ISI (Outperform), Deutsche Bank (Buy), UBS (Buy), and BTIG (Buy), while TD Cowen and Citigroup maintain Hold/Neutral ratings. The target price range spans from a low of $270.00 to a high of $522.00. The high target of $522.00 implies a 56.8% upside and likely assumes a successful turnaround under new leadership, margin expansion, and a return to historical growth rates. The low target of $270.00 suggests a 18.9% downside, pricing in continued sales weakness, margin compression, and potential loss of market share. The wide spread ($252) indicates high uncertainty about the company's future direction. Recent institutional ratings show no major downgrades, with most firms maintaining their previous stances, suggesting analysts are waiting for more clarity on the CEO transition and consumer spending trends before making significant changes.
Bulls vs Bears: DPZ Investment Factors
Domino's presents a classic value trap versus turnaround debate. The bull case rests on a deeply discounted forward P/E of 15.9x, strong free cash flow of $654M, and analyst consensus Buy with 16% upside. The bear case highlights decelerating revenue growth (3.5% YoY), a surprise CEO transition, and a high debt load. The single most important tension is whether the current valuation already prices in the headwinds or if further deterioration in same-store sales and margins will drive the stock lower. Currently, the bearish evidence is more compelling given the negative momentum and uncertainty, but the stock's low valuation provides a margin of safety for patient investors.
Bullish
- Forward P/E at 5-Year Low: DPZ's forward P/E of 15.9x is near the bottom of its 5-year range of 19x-39x, suggesting the stock is pricing in significant pessimism. If the company can stabilize earnings, multiple expansion could drive substantial upside.
- Strong Free Cash Flow Generation: Domino's generated $654M in trailing free cash flow, supporting a 1.65% dividend yield and aggressive share buybacks. This cash flow provides a cushion for debt service and shareholder returns even during downturns.
- Analyst Consensus Buy with 16% Upside: 26 analysts rate DPZ a Buy with an average target of $387.42, implying 16.4% upside from $332.97. The high target of $522 suggests 56.8% potential if the turnaround succeeds.
- Franchise Model Reduces Operational Risk: With 99% of stores franchised, Domino's has a capital-light model that generates stable royalty and supply chain revenue. This structure limits downside from store-level losses and provides predictable cash flows.
Bearish
- Revenue Growth Decelerating Sharply: Q1 2026 revenue grew only 3.5% YoY, down from 6.5% in Q1 2025 and 4.5% in Q4 2025. This deceleration signals weakening consumer demand even for value-oriented pizza, challenging the growth narrative.
- CEO Transition Creates Uncertainty: The surprise CEO change in April 2026 has spooked investors, with the stock hitting a 52-week low of $282 shortly after. Leadership transitions often disrupt strategic momentum and can lead to earnings misses.
- High Debt Load and Negative Equity: Domino's has a debt-to-equity ratio of -1.34 due to negative book equity, and a debt ratio of 2.78. While cash flow covers interest, any sustained weakness could strain the balance sheet and limit financial flexibility.
- PEG Ratio of 4.6x Indicates Overvaluation: Despite a low forward P/E, the PEG ratio of 4.6x suggests the stock is expensive relative to its expected earnings growth. This implies the market may be overpaying for modest growth prospects.
DPZ Technical Analysis
Domino's is in a clear downtrend, with the stock price down 30.1% over the past year, significantly underperforming the S&P 500's 16.5% gain. The current price of $332.97 sits at 68.4% of its 52-week range (low $282.00, high $486.68), indicating the stock is closer to its lows than highs, suggesting bearish sentiment and potential value opportunity if fundamentals stabilize. The 1-year relative strength of -46.6% versus the S&P 500 underscores persistent weakness. Short-term momentum shows a sharp divergence: the 1-month price change is +15.8%, while the 3-month change is -9.5%, and the 6-month change is -19.1%. This recent 1-month rally suggests a potential short-term bounce or mean reversion attempt, but the longer-term downtrend remains intact, and the 1-month relative strength of +15.0% versus the S&P 500 indicates the stock is outperforming recently, which could signal a trend reversal if sustained. Key support is at the 52-week low of $282.00, a break below which would likely accelerate selling pressure and confirm a new leg lower. Resistance is at the 52-week high of $486.68, and a breakout above that level would signal a major trend reversal. With a beta of 0.975, Domino's volatility is roughly in line with the market, meaning it offers no significant diversification benefit or extra risk relative to the S&P 500.
Beta
0.97
0.97x market volatility
Max Drawdown
-41.7%
Largest decline past year
52-Week Range
$282-$469
Price range past year
Annual Return
-25.0%
Cumulative gain past year
| Period | DPZ Return | S&P 500 |
|---|---|---|
| 1m | +14.2% | +0.2% |
| 3m | +2.9% | +3.7% |
| 6m | -15.3% | +8.0% |
| 1y | -25.0% | +18.2% |
| ytd | -18.3% | +9.6% |
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DPZ Fundamental Analysis
Domino's revenue trajectory shows modest growth but deceleration. In the most recent quarter (Q1 2026, ended March 22, 2026), revenue was $1,150.6 million, up 3.5% year-over-year, but this growth rate is below the 4.5% YoY growth seen in Q4 2025 and the 6.5% growth in Q1 2025. The supply chain segment, which accounts for 60% of revenue, is the primary driver, while domestic stores (33%) and international franchise (7%) contribute less. The deceleration suggests consumer spending headwinds are impacting even value-oriented pizza chains. The company is profitable, with net income of $139.8 million in Q1 2026 and a net margin of 12.2%, which is stable compared to 11.8% in Q4 2025 and 13.5% in Q1 2025. Gross margin was 40.4% in Q1 2026, slightly up from 39.7% in Q4 2025 but down from 39.9% in Q1 2025, indicating some cost pressure. Operating margin of 20.0% is healthy and typical for the restaurant industry. Domino's has a negative book value of equity due to significant debt and share repurchases, resulting in a debt-to-equity ratio of -1.34 and a negative ROE of -15.4%. However, the company generates strong free cash flow of $654.1 million on a trailing twelve-month basis, which supports its dividend (yield 1.65%) and share buybacks. The current ratio of 1.65 indicates adequate liquidity, but the high debt load (debt ratio of 2.78) warrants monitoring, especially if cash flow weakens.
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?
Since net income is positive, the primary valuation metric is the P/E ratio. The trailing P/E is 23.8x, while the forward P/E is 15.9x, a significant discount that implies the market expects earnings to grow substantially in the coming year. The gap between trailing and forward P/E suggests the market is pricing in a recovery or normalization of earnings after a trough. Compared to the industry average (not provided, but typically for restaurants around 20-25x), Domino's trailing P/E of 23.8x is roughly in line, but the forward P/E of 15.9x is a discount, potentially reflecting skepticism about the company's growth prospects. The PEG ratio of 4.6x suggests the stock is expensive relative to its expected earnings growth rate. Historically, Domino's trailing P/E has ranged from about 19x to 39x over the past five years. The current 23.8x is near the lower end of that range, indicating the stock is relatively cheap compared to its own history, which could be a value opportunity if the company can return to growth. However, the low P/E may also reflect structural challenges such as slowing same-store sales and increased competition.
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
Financial & Operational Risks: Domino's carries a heavy debt burden with a debt ratio of 2.78 and negative equity of -$3.67B, resulting in a debt-to-equity ratio of -1.34. While the company generates $654M in trailing free cash flow, any sustained decline in revenue or margins could impair its ability to service debt. The net margin has compressed from 13.5% in Q1 2025 to 12.2% in Q1 2026, indicating cost pressures. Revenue concentration in the supply chain segment (60% of revenue) exposes the company to commodity price fluctuations and delivery cost inflation. The decelerating revenue growth (3.5% YoY) suggests that even Domino's value proposition is not immune to consumer spending pullbacks.
Market & Competitive Risks: DPZ's stock has underperformed the S&P 500 by 46.6% over the past year, reflecting severe negative sentiment. The forward P/E of 15.9x is a discount to the trailing P/E of 23.8x, implying the market expects earnings to recover, but if growth disappoints, the multiple could compress further. Competition from other QSR chains and third-party delivery aggregators intensifies pricing pressure. Recent news of Berkshire Hathaway's CEO Greg Abel selling DPZ shares signals a lack of confidence from a major institutional holder. The stock's beta of 0.975 offers no diversification benefit, and a recession could further pressure consumer discretionary spending.
Worst-Case Scenario: If same-store sales continue to decline, margins erode, and the new CEO fails to articulate a credible turnaround plan, the stock could fall to the analyst low target of $270, representing an 18.9% downside from the current price of $332.97. In a severe recession, the stock could revisit its 52-week low of $282, a 15.3% decline. The maximum drawdown over the past year was 41.7%, suggesting that in a worst-case scenario, investors could lose up to 42% from the 52-week high, but from current levels, a realistic worst case is a decline to $270, a loss of approximately 19%.