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Wednesday's Exclusive News
Domino's Pizza: Outlook for the Berkshire Holding After Q1 DropSubmitted by Leo Miller. Date Posted: 4/29/2026. 
Key Points
- Berkshire Hathaway has stood by its position in Domino's Pizza for more than a year amid the stock's weak performance.
- Domino's shares took a significant tumble after the company's latest earnings report, as macro factors and competition hurt sales.
- Domino's is expanding while customers close down stores, but it is questionable whether the juice in this stock is worth the squeeze.
- Special Report: Elon Musk already made me a “wealthy man”
Warren Buffett's Berkshire Hathaway (NYSE: BRK.B) isn’t afraid to take stakes in companies the market is sour on. One such holding is Domino’s Pizza (NASDAQ: DPZ). Berkshire initiated a position in Domino’s during Q3 2024, purchasing 1.3 million shares. Although the stock was essentially flat from that start through the end of 2025, Berkshire has more than doubled its stake to over 3.4 million shares.
This reflects Berkshire’s long-term investment approach: continuing to buy a stock it sees as undervalued even when the broader market disagrees. Domino’s began 2026 on a weak note, with shares down nearly 20%. Much of the decline followed the company’s latest earnings report, which sent the stock down about 9% in a single session. After a difficult quarter, here’s where Domino’s stands going forward. Domino’s Misses, Lowers Guidance for 2026In Q1 2026, Domino's reported revenue of $1.15 billion, slightly below the $1.16 billion analysts expected. Overall sales rose 3.5% year over year. The bigger disappointment was adjusted earnings per share, which fell nearly 5% year over year to $4.13 versus expectations of $4.29 (a decline of about 1% implied by estimates). U.S. same-store sales increased just 0.9%, suggesting that most of Domino’s growth came from new store openings rather than existing-store improvement. While new units are a legitimate growth driver, they don’t provide an apples-to-apples comparison and tell us less about the underlying health of the business. Domino’s also lowered its full-year guidance. The company now expects same-store sales to grow in the “low single digits” in both the U.S. and international markets, compared with prior forecasts of about 3% in the U.S. and 1%–2% internationally. While the new phrasing overlaps with prior outlooks, it widens the range and leaves room for growth barely above zero. Weak Consumer, Elevated Competition Hit Domino’sDomino’s cited several headwinds for the quarter. Consumer sentiment has dropped to levels not seen since the COVID-19 pandemic, according to the University of Michigan consumer sentiment survey. Even with Domino’s focus on affordability, weak sentiment hurts restaurant traffic and aligns with the sluggish same-store sales figure. Still, same-store sales growth has averaged roughly 2.3% since the start of 2023, suggesting a potential path to recovery. Competition has also intensified, with rivals offering sharper deals in an area where Domino’s has historically held an advantage. Those rivals, however, are also under pressure: Pizza Hut (a Yum! Brands (NYSE: YUM) subsidiary) plans to close 250 stores in 2026, and Papa John's International (NASDAQ: PZZA) intends to close about 300 North American stores in 2026 and 2027 combined. By contrast, Domino’s plans to open more than 175 U.S. stores in 2026. Lower-price promotions generally favor companies with scale, because they must offset lower sales per order with higher order volume to maintain revenue. Among these pizza chains, Domino’s is the one increasing scale, which raises questions about Pizza Hut’s and Papa John’s ability to match Domino’s pricing sustainably while shrinking their footprints. Domino’s: Long-Term Value Doesn’t Equal Long-Term OutperformanceDomino's free cash flow has grown at a compound annual rate of roughly 16% since Q1 2023. Its current valuation, however, implies long-term free cash flow growth of less than half that pace. That strong cash-flow expansion occurred despite revenue declines in 2023 and modest 5% growth in both 2024 and 2025; margin improvements have driven free cash flow higher than top-line growth. The company’s free cash flow margin is up about 400 basis points since Q1 2023. As a leader in a mature pizza market, Domino’s is unlikely to sustain materially higher growth than it has recently delivered. Continued margin expansion will therefore be critical to the stock’s upside. Domino’s affordable pricing and ongoing store openings support the potential for further margin gains. The MarketBeat consensus price target for Domino’s sits near $421, implying roughly 20% upside. Price targets moved down after the latest report, though, with the immediately updated average around $407. There is likely some value in Domino’s shares, but at current levels it seems unlikely the company will outperform the S&P 500 Index over the long term. It will be worth watching what Berkshire Hathaway does with its Domino’s position in the coming quarters, especially with Warren Buffett now retired. |
