Domino’s Pizza (NYSE: DPZ) is starting 2026 in an unusual position for a long-time market outperformer. After years of premium valuation and steady execution, the stock ended 2025 mostly flat, lagging both the broader market and several quick-service peers. That underperformance questioned whether slowing sales are a temporary pause, or a sign the growth story has reached its peak.
At roughly $410 per share, Domino’s trades well below its 2022 highs despite continued earnings growth, strong margins, and a business model that remains one of the most efficient in global food service. The debate heading into 2026 centers on whether earnings momentum, capital returns, and international expansion can reassert the stock’s long-term trajectory.
Slower Sales, Stronger Profits
The main overhang on Domino’s stock has been decelerating sales growth. Global retail sales growth cooled in 2025, with U.S. same-store sales expanding at a noticeably slower pace as consumers pulled back amid higher living costs. That slowdown weighed on sentiment, particularly after the stock entered last year trading at a historically high multiple.
Yet profitability has moved in the opposite direction. Domino’s operating margins climbed above 18% in 2025, with net margins exceeding many large restaurant peers. Earnings per share surged at a double-digit pace, supported by pricing discipline, operational efficiency, and the company’s asset-light franchise model. Domino’s has now beaten earnings expectations in the vast majority of recent quarters, reinforcing confidence in management’s execution even as top-line growth moderates.
Valuation Reset Changes the Risk–Reward
One of the most meaningful shifts for investors is valuation. Domino’s price-to-earnings multiple has compressed sharply from peak levels, bringing the stock closer to, and in some cases below , its long-term average. That reset has reframed the investment case from one reliant on rapid growth to one anchored in durability, cash generation, and steady earnings expansion.
At current levels, Domino’s trades at a discount to some premium fast-casual peers despite delivering stronger margins and more consistent free cash flow. Analysts broadly expect earnings to grow at a high-single-digit to low-double-digit pace over the next several years, a profile that could justify mid-teens total returns even without multiple expansion.
International Growth and Digital Scale
Longer term, Domino’s international business remains a key pillar of the bull case. The company continues to add stores overseas at a faster clip than in the U.S., benefiting from strong brand recognition and a franchise system that scales efficiently across markets. International units now represent the majority of Domino’s global footprint, providing a runway that many domestic-focused restaurant chains lack.
Technology remains another structural advantage. Domino’s digital ordering ecosystem, data analytics, and delivery infrastructure help drive order frequency and labor efficiency. In an environment where many restaurant operators struggle with costs, Domino’s ability to leverage scale and automation continues to support margins and returns on invested capital.
Capital Allocation and Institutional Support
Domino’s capital return strategy has also come back into focus. Share repurchases remain a meaningful lever, steadily reducing share count and amplifying earnings growth. The company’s balance sheet flexibility allows it to return capital while still investing in technology and global expansion.
Notably, long-term institutional interest has increased as the stock has pulled back. Value-oriented investors have highlighted Domino’s predictable cash flows, durable brand, and pricing power as attractive characteristics in a more uncertain economic backdrop. While institutional buying alone does not define future performance, it underscores the perception that much of the growth slowdown risk may already be reflected in the stock.
Key Risks to Watch
Despite the improved setup, risks remain. U.S. consumer pressure could persist longer than expected, limiting near-term same-store sales growth. Competitive intensity in delivery and value-oriented dining continues to rise, particularly as rivals lean on promotions to drive traffic. Additionally, while international expansion is a strength, it introduces exposure to currency fluctuations and uneven regional demand. Execution abroad will remain essential to sustaining the company’s growth profile.
Looking Ahead
For investors, Domino’s in 2026 looks less like a momentum stock and more like a quality compounder emerging from a valuation reset. If earnings growth remains intact and international expansion continues as planned, the stock may not need aggressive multiple expansion to deliver solid returns. Instead, steady profit growth, disciplined capital allocation, and incremental sales improvement could be enough to reestablish Domino’s as a core long-term holding in the consumer discretionary space.