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More Reading from MarketBeat Media
Domino's Pizza: Outlook for the Berkshire Holding After Q1 DropReported by Leo Miller. First Published: 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 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 time through the end of 2025, Berkshire has more than doubled its stake to over 3.4 million shares. This underscores Berkshire’s long-term investment style: continuing to buy a stock it views as undervalued even when the broader market disagrees.
Domino’s has started 2026 poorly, with shares down nearly 20% year to date. Much of the decline followed the firm’s latest earnings report, which drove the stock down almost 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 expectations of $1.16 billion. Overall sales rose 3.5% year over year. The company’s adjusted earnings per share, however, fell by nearly 5% year over year to $4.13, versus analyst expectations of $4.29 (a roughly 1% decline). U.S. same-store sales increased just 0.9%, indicating that most growth came from new store openings rather than stronger performance at existing locations. While new stores are a legitimate growth driver, they do not provide an “apples-to-apples” comparison and say less about the underlying health of the business. To make matters worse, Domino’s lowered its full-year guidance. Management now expects same-store sales to grow by “low single digits” in both the U.S. and international markets. That replaces prior expectations of about 3% in the U.S. and 1%–2% internationally. While “low single digits” can encompass those figures, the change is effectively a downgrade because it leaves room for outcomes closer to zero growth. Weak Consumer, Elevated Competition Hit Domino’sDomino’s attributed the weak results to several factors. The company cited a deterioration in consumer sentiment to levels not seen since the COVID-19 pandemic (as shown by the University of Michigan consumer sentiment index). Even with Domino’s focus on value, poor consumer confidence can depress repeat visits and lower same-store sales. Still, since early 2023, U.S. same-store sales have averaged roughly 2.3%, suggesting a recovery is plausible as sentiment improves. Competitive pressure has also intensified. Rivals have been promoting deeper discounts in areas where Domino’s has traditionally led on price. Yet those competitors are not immune to stress: 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 across 2026 and 2027. By contrast, Domino’s plans to open more than 175 U.S. stores in 2026. Lower-price competition favors scale: companies must offset lower sales per order with higher order volume to maintain revenue. Among the major pizza chains, Domino’s is the only one increasing scale, which raises questions about whether Pizza Hut and Papa John's can sustainably match Domino’s price promotions while shrinking their store counts. Domino’s: Long-Term Value Doesn’t Guarantee OutperformanceDomino’s has grown free cash flow at a compound annual rate near 16% since Q1 2023. Its valuation, however, implies long-term free cash flow growth of less than half that pace. Strong free cash flow gains came despite revenue declines in 2023 and modest top-line growth of roughly 5% in 2024 and 2025, driven largely by margin improvement. The firm’s free cash flow margin has expanded by about 400 basis points since Q1 2023. As a leader in a mature pizza market, Domino’s may find it hard to sustain growth materially above recent levels. That makes continued margin expansion critical to the stock’s long-term outlook. Domino’s value positioning and ongoing store growth support potential margin gains, but those gains will need to be realized to justify current expectations. The MarketBeat consensus price target on Domino’s sits near $421, implying more than 20% upside from current levels. However, price targets were trimmed after the latest report, with immediately updated averages near $407. There appears to be some value in Domino’s shares, but it seems unlikely this mature-business name will materially outperform the S&P 500 Index over the long term at current valuations. It will be interesting to watch Berkshire Hathaway’s actions on its Domino’s position in the coming quarters, especially with Warren Buffett now retired. |
