Can Domino's Pizza Kick Back Into High Gear in 2026?

Core Viewpoint - Domino's Pizza has experienced a significant slowdown in growth in 2025, leading to a flat stock performance compared to the S&P 500's gains, raising questions about its future potential and valuation [1][2]. Group 1: Stock Performance and Valuation - Domino's Pizza shares are down 0.6% in 2025, trading 26% below their all-time high from early 2022 [2][4]. - The price-to-earnings (P/E) ratio has decreased to under 25, which is nearly 25% below its average over the past decade, indicating a potential buying opportunity [5][6]. - The current market capitalization of Domino's Pizza is $14 billion, with a current stock price of $418.88 [9]. Group 2: Sales Growth and Market Conditions - Global sales growth for Domino's has slowed to 5.5% in 2025 from 6.5% in 2024, with U.S. same-store sales growth dropping to 2.7% from 4.5% [4]. - The company is positioned to potentially capture market share from other restaurants as pizza remains a cost-effective meal option amid rising living expenses [6][10]. Group 3: Investment Activity - Berkshire Hathaway has accumulated an 8.8% stake in Domino's Pizza, valued at $1.2 billion, indicating confidence in the company's long-term prospects [7][8]. - The investment strategy of Berkshire Hathaway, known for its value-oriented approach, suggests a positive outlook for Domino's Pizza despite current challenges [8]. Group 4: Future Outlook - Analysts project Domino's Pizza will achieve annual earnings growth of 10% to 11% over the next three to five years, translating to total returns of 12% to 14% when including dividends [11]. - The company's established business model and competitive advantages in the fragmented pizza market position it for a potential recovery and return to growth in 2026 and beyond [10][11].