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Just For You
Domino's Pizza: Outlook for the Berkshire Holding After Q1 DropAuthor: Leo Miller. Publication Date: 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 has soured 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. Although the stock was essentially flat through the end of 2025, Berkshire has more than doubled its holding to over 3.4 million shares.
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That reflects Berkshire’s long-term approach: continuing to buy a stock it believes is undervalued even as the market disagrees. Domino’s started 2026 poorly, with shares down nearly 20%. Much of the decline followed the company’s latest earnings report, which sent the stock down 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 reported revenue of $1.15 billion, slightly under expectations of $1.16 billion, and overall sales rose 3.5% year over year. The more notable miss was adjusted earnings per share, which fell about 5% year over year to $4.13 versus analysts' $4.29 estimate (which implied roughly a 1% decline). U.S. same-store sales grew just 0.9%, suggesting most of Domino’s growth was driven by new store openings. While new units are a legitimate growth driver, they aren’t an apples-to-apples measure of operating health—adding stores can boost total sales even if existing locations are underperforming. Domino’s also lowered its full-year guidance, calling for same-store sales to grow in the “low single digits” in both U.S. and international markets. That phrasing overlaps with prior forecasts (about 3% in the U.S. and 1%–2% internationally) but is vaguer and allows for lower growth closer to 0%, effectively representing a downgrade. Weak Consumer, Elevated Competition Hit Domino'sDomino’s pointed to several headwinds. The company noted that consumer sentiment has weakened to levels not seen since the COVID pandemic. Even with Domino’s focus on affordability, weak consumer sentiment pressures restaurant demand and aligns with the muted same-store sales, suggesting fewer repeat purchases. That said, same-store sales have averaged about 2.3% since early 2023, implying a potential path to recovery. Competition has also intensified as rivals promoted sharper deals in areas where Domino’s has historically led. Yet Domino’s chief competitors are themselves retrenching: 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 roughly 300 North American stores across 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 lower revenue per order with higher order volume to maintain top-line growth. Among the major pizza chains, Domino’s is the only one expanding store count, raising questions about rivals’ ability to sustainably match Domino’s pricing while shrinking their footprints. Domino's: Long-Term Value Doesn’t Equal Long-Term OutperformanceDomino's has grown free cash flow at about a 16% compound annual rate since Q1 2023, while the stock’s current valuation implies long-term free cash flow growth of less than half that rate. That strong cash-flow growth occurred despite revenue declines in 2023 and modest revenue gains (~5%) in 2024 and 2025; margin expansion has driven free cash flow higher, with free cash flow margin up roughly 400 basis points since Q1 2023. As a leader in a relatively mature pizza market, Domino’s is unlikely to sustain materially higher growth than it has recently delivered. That makes further margin improvement central to the stock’s upside. Domino’s low-price positioning and continued unit expansion are supportive of future margin gains. The MarketBeat consensus price target sits near $421, implying more than 20% upside, though targets were revised lower after the latest report, with the immediately updated average near $407. There appears to be some intrinsic value in Domino's shares. However, at current levels it seems unlikely a company in a mature industry will reliably outperform the S&P 500 Index over the long term. It will be worth watching what Berkshire Hathaway does with its Domino’s stake in the coming quarters, with Warren Buffett now retired. |
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