Domino's Stock Slips 15% in 6 Months: Should You Buy, Hold or Sell?

Domino's Pizza, Inc. DPZ stock has declined 15.3% in the past six months compared with the Zacks Retail - Restaurants industry’s 9.1% fall. Over the same period, DPZ has also underperformed the Zacks Retail and Wholesale sector and the S&P 500, which gained 1.9% and 10.3%, respectively.

Investor sentiment has been pressured by softer-than-expected same-store sales, weaker average ticket and heightened competition across the quick-service restaurant industry. Second-quarter 2026 results were hurt as the Premium Series and Slice Sauce failed to generate the expected mix while Domino’s cycled the stronger prior-year Stuffed Crust launch. International operations also faced macroeconomic and geopolitical pressures. Against this backdrop, should investors buy, hold or sell DPZ shares?

DPZ’s 6-Month Price Performance

Image Source: Zacks Investment Research

Over the past six months, DPZ has lagged industry peers Starbucks Corporation SBUX, whose shares gained 9.4%, and Chipotle Mexican Grill, Inc. CMG, which declined 1.6%. However, Domino’s has outperformed McDonald's Corporation MCD, whose shares fell 18.6%.

Domino's Ticket Weakness and Cost Pressures Weigh on Results

Domino’s faced weaker average ticket in the second quarter of 2026, with U.S. same-store sales increasing just 0.1% as meaningful order-count growth was largely offset by ticket pressure. The company also cycled the prior-year Stuffed Crust launch, which carried a higher ticket and favorable mix. Meanwhile, the Premium Series and Slice Sauce underperformed expectations, while delivery comparable sales declined 0.7%.

International same-store sales slipped 0.1%, reflecting macroeconomic and geopolitical uncertainty and weakness at Domino’s Pizza Enterprises (DPE). DPE’s decision to reduce lower-margin transactions weighed on order counts, while higher ticket was insufficient to offset the decline. Pizza-category growth also skewed toward dine-in occasions, where Domino’s does not directly compete.

Company-operated restaurant profitability also weakened as higher food, labor and insurance costs pressured margins. These cost increases weighed on both company-owned store profitability and consolidated gross margin, adding to the pressure from softer sales trends. Other expenses also remained elevated. G&A costs increased mainly due to the biennial Worldwide Rally, while net interest expense rose because of lower interest income. Cash flow was affected by unfavorable working-capital movements, the timing of advertising payments and higher capital spending. Meanwhile, the challenging start to the year, along with macroeconomic pressures, weighed on franchisee profitability and the U.S. development pipeline, leading Domino’s to modestly lower its domestic net-store outlook.

Domino's Growth Strategy Remains Intact Despite Industry Headwinds

Despite near-term pressures, Domino’s continues to demonstrate healthy underlying demand. Management estimated that broader U.S. QSR order counts were flat in the second quarter, yet Domino’s generated meaningful order-count growth across both delivery and carryout while attracting millions of new customers. This expanding customer base is strengthening the company’s loyalty flywheel. Loyalty membership at the end of 2025 was roughly 20% above the level before the redesigned program was launched, providing a larger base from which Domino’s can drive purchase frequency over time.

Channel expansion and product innovation offer additional growth opportunities. Domino’s believes it is now the No. 1 pizza player on both Uber and DoorDash, while management continues to estimate approximately 50% incrementality from aggregator orders. The revamped Best Deal Ever featuring Stuffed Crust has also generated a positive customer response, while a new signature pizza is designed to address an incremental consumer occasion. Management continues to expect low-single-digit U.S. and international same-store sales growth, approximately 800 international net store openings and mid-single-digit global retail sales growth in 2026.

Domino's Scale and Operational Execution Support Profitability

Domino’s scale, asset-light franchise model and supply-chain capabilities remain important financial strengths. Second-quarter global retail sales increased 3%, including growth of 1.9% in the United States and 4.1% internationally. The system added 209 net stores during the quarter, comprising 26 in the United States and 183 internationally.

Revenues increased 4.3%, supported by higher supply-chain revenues and global franchise royalties, while income from operations rose 3.1%. Higher order volumes contributed to supply-chain revenues and gross profit, while supply-chain gross margin expanded 20 basis points, primarily reflecting procurement productivity. These efficiencies provide a partial offset to rising restaurant-level cost pressures.

Management continues to expect mid- to high-single-digit operating income growth for 2026. Domino’s also ended the quarter with $164.8 million in unrestricted cash and $263.6 million of available borrowing capacity, providing financial flexibility to support strategic investments while continuing dividends and share repurchases.

Earnings Estimate Revision of DPZ Stock

DPZ’s earnings estimates for 2026 and 2027 have trended downward in the past 30 days. The revised estimates for 2026 and 2027 imply year-over-year growth of 4.2% and 7.5%, respectively.

Image Source: Zacks Investment Research

 On the other hand, earnings for Chipotle Mexican Grill are projected to decline 2.6% year over year, while Starbucks and McDonald's are expected to grow 21.1% and 5.6%, respectively, this year.

DPZ Stock Trades at a Discount

DPZ trades at a forward 12-month P/E ratio of 17X, below the industry average. The discounted valuation reflects investor caution surrounding softer U.S. same-store sales growth, weaker average ticket and ongoing macroeconomic pressure on consumers. However, meaningful order-count growth, continued market-share gains, expanding aggregator channels and a strong innovation pipeline provide support to the longer-term investment case.

DPZ P/E Ratio (Forward 12 Months)

Image Source: Zacks Investment Research

Conclusion

Domino’s long-term growth prospects remain supported by healthy order-count trends, market-share opportunities, loyalty growth and expanding reach through Uber and DoorDash. Product innovation, global store expansion and supply-chain efficiencies add further support. However, weaker average ticket, international softness, rising operating costs and pressure on franchisee profitability remain near-term concerns. DPZ’s discounted valuation relative to the industry provides some support, but earnings estimates for both 2026 and 2027 have moved lower over the past 30 days.

Overall, healthy transaction momentum and long-term growth opportunities argue against a bearish stance, but ticket weakness, margin pressure and downward estimate revisions limit the case for an aggressive entry. Investors may be better served holding DPZ shares while monitoring improvement in ticket, margins and franchisee economics.

DPZ stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research