Is Domino's Pizza Ready to High Kick Back in 2026? A Deep Dive Into Valuation and Growth Potential

The Valuation Shift That Changes Everything

Domino’s Pizza (NASDAQ: DPZ) has underperformed dramatically in 2025, with shares down just 0.6% while the S&P 500 surged 16.4% year-to-date. Yet beneath the surface lies a compelling turnaround narrative. After trading at a premium valuation of 34x earnings in mid-2024, the stock’s pullback has compressed its price-to-earnings (P/E) ratio to under 25—nearly 25% below its decade-long average. This represents a textbook buy-the-dip setup, a stark contrast to the overvaluation that plagued investors a year ago.

Historically, Domino’s Pizza has been a market outperformer, delivering 280% returns versus the S&P 500’s 232% over the past decade. Today’s valuation reset positions the company for a potential comeback.

Understanding the Growth Deceleration

The core issue dragging on sentiment is straightforward: growth has stalled. Global same-store sales expansion slowed to 5.5% through the first nine months of 2025, down from 6.5% in 2024. Domestically, the picture darkens further—U.S. same-store sales growth fell to 2.7% from 4.5% in the prior year.

This slowdown reflects broader headwinds across the restaurant sector. As Americans contend with elevated living costs, discretionary spending has tightened, hitting most quick-service brands. However, Domino’s Pizza operates in a unique position: pizza remains one of the most affordable meals for group feeding in a cost-conscious environment. This economic resilience could actually allow the company to capture market share from traditional competitors struggling with pricing power.

Why a Legendary Investor is Loading Up

The most bullish signal comes from Berkshire Hathaway, Warren Buffett’s flagship investment vehicle. Beginning in Q3 2024, Berkshire has methodically accumulated an 8.8% stake in Domino’s Pizza, now valued at $1.2 billion, with fresh purchases each quarter. For an outfit renowned for disciplined capital allocation—and currently in cash-raising mode rather than aggressive buying—this sustained accumulation is noteworthy.

While institutional moves shouldn’t substitute for independent analysis, Berkshire’s conviction at depressed valuations carries weight. Buffett’s team has essentially voted with their wallet during a period when the stock faced headwinds.

The Franchise Model’s Enduring Strength

Domino’s Pizza’s competitive moat remains intact. As an established franchise business with global reach, the company benefits from:

• Network economics: Thousands of mom-and-pop pizzerias struggle to match Domino’s technology infrastructure, delivery logistics, and unit-level pricing efficiency
• Market fragmentation: The U.S. pizza market remains highly fragmented, providing years of consolidation upside
• Recession resilience: Pizza demand holds steady even during economic downturns, supporting predictable cash flows

Analysts project earnings growth of 10-11% annually over the next three to five years. Factor in the dividend yield, and investors could realize 12-14% annualized total returns even if current valuations remain stable—an attractive profile for a mature business.

What 2026 Could Deliver

The stock’s recent rerating from stretched to reasonable valuation marks an inflection point. Domino’s Pizza’s fundamentals haven’t deteriorated; rather, market expectations have normalized. With the P/E now at historically fair levels rather than premium levels, the stock appears positioned to exit its underperformance phase.

The high kick back into growth mode may take time, but the ingredients are there: fortress balance sheet economics, a durable market position, improving valuation appeal, and strategic investor validation. For shareholders willing to look past short-term sales fluctuations, 2026 could mark the beginning of Domino’s Pizza’s return to its winning trajectory.