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More Reading from MarketBeat Media
Domino's Pizza: Outlook for the Berkshire Holding After Q1 DropWritten 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’s “Hidden” Company
Warren Buffett's Berkshire Hathaway (NYSE: BRK.B) isn’t afraid to take stakes in companies the market is sour on. One of those names is Domino’s Pizza (NASDAQ: DPZ). Berkshire initiated a position in Domino’s during Q3 2024, purchasing 1.3 million shares. Despite the stock being essentially flat from then through the end of 2025, Berkshire has more than doubled its position to over 3.4 million shares.
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That behavior reflects Berkshire’s long-term investment style: continuing to buy shares it considers undervalued even when the market disagrees. Domino’s has gotten off to a rough start in 2026, with shares down nearly 20%. Much of that decline followed the company’s latest earnings report, which caused the stock to drop nearly 9% in a single day. After a difficult quarter, here’s where Domino’s stands going forward. Domino’s Misses, Lowers Guidance for 2026In Q1 2026, Domino’s posted revenue of $1.15 billion, slightly below expectations of $1.16 billion. Total revenue rose 3.5% year over year. The miss was more pronounced on the bottom line: adjusted earnings per share fell nearly 5% year over year to $4.13, compared with analyst expectations of $4.29. U.S. same-store sales increased by just 0.9%, implying that new store openings accounted for most of Domino’s top-line growth. While new units are a valid growth driver, they don’t provide an “apples-to-apples” comparison for existing-store health — sales can rise simply by adding locations even if established stores are struggling. Further, Domino’s 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. That compares with prior assumptions of about 3% in the U.S. and 1%–2% internationally. While “low single digits” overlaps with those earlier figures, the wording effectively widens the range downward and signals a weaker outlook. Weak Consumer, Elevated Competition Hit Domino’sDomino’s attributed the underperformance to several factors. The company pointed to a sharp decline in consumer sentiment — sentiment has slipped to levels not seen since the COVID‑19 pandemic — and even a brand known for affordability is vulnerable when customers pull back. The low same-store-sales result suggests fewer repeat purchases, though since early 2023 that metric has averaged around 2.3%, leaving room for a potential recovery. Competition also intensified as rivals chased customers with better deals. Those competitors, however, face their own challenges. Pizza Hut (a Yum! Brands (NYSE: YUM) subsidiary) plans to close 250 stores in 2026, and Papa John's International (NASDAQ: PZZA) intends to shutter about 300 North American locations over 2026–2027. By contrast, Domino’s plans to open more than 175 U.S. stores in 2026. Lower-price promotions tend to favor scale: companies must offset smaller sales per order with higher order volume to maintain revenue. Among these pizza chains, Domino’s is the only one expanding store count, which raises questions about whether Pizza Hut and Papa John’s can sustainably match Domino’s pricing while reducing locations. Domino’s: Long-Term Value Doesn’t Guarantee OutperformanceDomino’s has grown free cash flow at a compound annual growth rate near 16% since Q1 2023. Its current valuation, however, implies long-term free-cash-flow growth of less than half that pace. That divergence exists because Domino’s has achieved substantial margin improvement: its free-cash-flow margin is roughly 400 basis points higher than it was in Q1 2023, so cash generation has risen faster than sales. As a leader in a mature pizza market, Domino’s is unlikely to sustain materially higher volume growth than it has recently delivered. That makes continued margin expansion critical to the stock’s upside. Domino’s low pricing, operating efficiency and ability to add stores support the case for further margin gains. The MarketBeat consensus price target for Domino’s sits near $421, implying more than 20% upside. Price targets moved down after the company’s latest report, with the average of immediately updated targets near $407. There appears to be some value in Domino’s shares, but it’s not obvious the company — operating in a mature industry — will reliably outperform the S&P 500 Index over the long term at current prices. It will be worth watching how Berkshire Hathaway manages its Domino’s position in the coming quarters, especially now that Warren Buffett is retired. |
