Domino's Pizza DPZ
Consumer Cyclical · Restaurants · Synthos Deep Dive · 2026-07-03
The Overview
Domino's is the biggest pizza company in the world — about 22,000 stores, almost all owned by franchisees. Domino's makes most of its money three ways: selling ingredients and dough to its franchisees (its "supply chain"), collecting royalties on every pizza those franchisees sell, and running a smaller batch of company-owned US stores.
The business itself is very good and very profitable. The problem right now is that sales at existing stores have basically stopped growing — US same-store sales rose less than 1% last quarter, and international actually dipped slightly. The stock has fallen about a third over the past year as investors worried that the fast-growth days are behind it.
On price, the stock is middling — not clearly cheap, not clearly expensive. So our verdict is Watch: a good company you'd happily own at the right price, but there's no urgency to buy today.
Here's what our three scores mean in everyday terms:
- Downside Risk 6/10 (a bit elevated). The stock doesn't swing wildly day to day, but the company carries a lot of debt and the price has already fallen hard, which means bad news could still hurt.
- Growth Quality 5/10 (middle of the road). Extremely profitable, but growing slowly now.
- Exponential Potential 2/10 (low). This is a mature, mostly-built-out business. It can grind higher, but it is very unlikely to double quickly.
The one big worry: if Americans keep ordering roughly the same amount of pizza while cheaper and delivery-app rivals fight harder, Domino's growth stays stuck — and a stock that still trades at a premium could keep drifting lower.
Putting a number on it: our fair-value estimate is $340 against a current price of $350.00 — a premium price for a business we still like.
Our summary metrics
Net-debt/EBITDA 4.9× and negative equity offset a low 0.97 beta; already −45% off peak, US SSS near zero.
Only ~5% fwd revenue / ~10% fwd EPS CAGR, flat-ish SSS, but 40% gross margin & huge ROIC on a franchise model.
Mature ~22k-store category leader; growth decelerating, small TAM headroom vs a $10B cap — no multibagger here.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Mature ~22k-store category leader; growth decelerating, small TAM headroom vs a $10B cap — no multibagger here.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $418 (high $540 / low $315; 28 Buy · 23 Hold · 1 Sell) — context, not our anchor |
| Valuation | 17.8× trailing EPS · ~16× FY26E · ~15× FY27E · ~11× FY30E · EV/S 3.1× · EV/EBITDA 15.2× |
| Technicals | Downtrend — $311.66, −36% off the 52-wk high, below both 50/200-DMA, RSI 50, −32% 12-mo (SPY +21%) |
| Conviction | Low — 0 net-bullish voices, 0 traceable claims; verdict rests on fundamentals + quant only |
| Position sizing | If owned at all, a small ~1–2% income/defensive satellite — not a core holding here |
What the experts actually said
No independent expert claims in the Synthos knowledge base yet for DPZ — this dive is fundamentals- and technicals-driven, not panel-driven.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $350.00, 7% above the 50-day average ($329), 4% below the 200-day average ($366) — a mixed trend. 25% below the 52-week high of $467, 24% above the 52-week low of $283.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $350.00 is currently inside the band (band $328–$370).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 55.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently below its signal line by 1.52, negative momentum.
Relative performance vs S&P 500 & its sector (XLY (sector)), set to 100 a year ago
Solid = DPZ · dashed = S&P 500 · dotted = XLY (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Domino's Pizza (Nasdaq: DPZ) is the world's largest pizza company — ~22,300 stores across ~90 markets as of Q1'26 — run almost entirely on an asset-light franchise model. Founded 1960, headquartered in Ann Arbor, Michigan; CEO Russell Weiner. Fiscal year ends late December (a 52/53-week retail calendar).
The company reports three segments. Supply Chain is the largest by revenue (it sells dough, cheese, and equipment to franchisees), while US Stores (franchise royalties + a small base of company-owned stores) and International Franchise (pure royalty streams) drive the high-margin, high-return economics.
Revenue mix (FY2025, from filings):
- By segment: Supply Chain $2.99B (61%) · US Stores $1.61B (33%) · International Franchise $0.34B (7%). Note: Supply Chain is a high-volume, lower-margin pass-through business, while the franchise royalty lines are small in dollars but nearly pure profit — this is why blended margins look modest but returns on capital are enormous.
- By geography: the FMP geographic split only breaks out Domestic Stores ($1.61B) vs International Franchise royalties ($0.34B); the bulk of international retail sales flow through franchisees and appear as royalties, not consolidated revenue. Roughly half of the ~$4.7B global retail sales base is now international (Q1'26: US retail sales $2.30B vs international $2.44B), even though it is a small slice of reported revenue.
The strategic story management keeps returning to: defend and grow US order counts and market share in an "intensifying macro and competitive environment," lean on scale and best-in-class store-level profitability, and keep opening stores internationally (Q1'26 net store growth of 180, of which 161 international).
2. The expert thesis — why the panel is bullish (traceable)
There is no expert coverage of DPZ in the Synthos knowledge base. total_claims = 0, net_bullish_voices = 0, and the top list is empty. There are no claim_id values to cite, and this note fabricates none.
What that means for the verdict: this is a fundamentals- and quant-driven call. Nothing here rests on a distilled expert voice; every number below comes from the FMP financials, the analyst-estimates feed, the technicals block, and management's own SEC earnings release (§9, half-weighted). Readers who weight Synthos calls partly by expert breadth should treat this as a low-conviction, data-only note — appropriately reflected in the Low conviction rating and the Watch verdict.
For outside context (explicitly not Synthos KB voices): the sell-side is net-positive but split — 28 Buy, 23 Hold, 1 Sell — with a consensus price target of $418. We show that as context in §6, not as our anchor.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 6 · Elevated | Net-debt/EBITDA 4.9× and negative book equity (a levered, buyback-heavy franchise) are the flags; partly offset by low beta 0.97, a defensive category, and a stock already −45% off its peak so much bad news is priced. Flat US same-store sales are the structural worry. |
| Growth Quality | 5 · Moderate | Only ~5% forward revenue CAGR and ~10% forward EPS CAGR with flat-to-negative same-store sales, but genuinely elite unit economics: 40% gross margin, ROIC ~58%, ROCE ~78%, ~$672M FCF. High-quality business, low-quality growth right now. |
| Exponential Potential | 2 · Low | A mature ~22,300-store global category leader growing low-single digits and decelerating. No acceleration, limited TAM headroom for a name this saturated in its core market. Not a multibagger candidate. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. Instead the cases bound the range, and the scores above summarize them.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | US same-store sales re-accelerate to ~3%+, international SSS turns positive, buybacks shrink the share count faster. FY27E EPS beats to ~$22 (vs $20.9 cons); multiple re-rates to ~20×. | ~$445 (+43%) |
| Base (our anchor) | Estimates roughly hit — FY27E EPS ~$20.9; a low-single-digit-SSS, high-ROIC compounder earns a ~16× multiple. | ~$340 (+9%) |
| Bear | US SSS stays near zero, competition (delivery apps, value wars) pressures order counts; leverage limits flexibility. FY27E EPS misses to ~$19; multiple de-rates to ~12×. | ~$235 (−25%) |
Synthos fair value = the base case, ~$340 (+9%), with the full $235–$445 span as the honest range. Our anchor sits below the Street's $418 consensus: we think a decelerating, highly-levered name deserves a mid-teens multiple, not the low-20s the Street's targets imply. Notably, the current price ($311.66) is close to the Street's low target ($315) — the market is already trading DPZ near the bearish end of the sell-side range. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). DPZ is a high-return compounder that is well past its growth inflection — the opposite of an exponential:
- Forward growth: revenue CAGR FY25→FY30E ~4.7% ($4.94B → $6.22B); EPS CAGR ~9.6% ($17.57 → $27.78 cons), the gap driven by buybacks and modest margin gains, not volume.
- Acceleration (the 2nd derivative) is flat-to-negative: FY25 revenue grew +5.0%; consensus has FY26 +5.6%, FY27 +3.4%, FY28 +4.0% — a low-single-digit plateau, not an inflection. US same-store sales were +0.9% in Q1'26 and international was −0.4% — the clearest tell that the core is mature. Per our flagship philosophy we pick forward next-exponentials over trailing compounders; DPZ is neither an exponential nor even an accelerating compounder today.
- Room to run: the US market is largely built out (~7,200 US stores); the growth story is international unit expansion (161 net international opens in Q1'26) and share gains — real, but slow. At a $10.4B cap the name could mechanically double over many years via buybacks + mid-single-digit growth, but there is no fast multibagger path here.
- Reinvestment runway: capex is light (~$121M/yr, ~2.4% of revenue) because franchisees fund the stores. The capital story is a return-of-capital story (dividends + buybacks), not a reinvestment-for-growth story.
Exponential Potential: Low (2/10). Own DPZ, if at all, for durable high-ROIC cash generation and shareholder returns — never for exponential growth. Honesty demands the low score: this is a quality mature business, not a next-exponential.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $4.94B, +5.0% (FY24 $4.71B, +5.1% on FY23 $4.48B). Steady low-single-digit growth at a mature scale.
- Quarterly trajectory: Q1'25 $1.11B → Q2 $1.15B → Q3 $1.15B → Q4 $1.54B (seasonal peak) → Q1'26 $1.15B (+3.5% YoY). Growth is decelerating, not accelerating.
- Margins: gross 40.1% TTM, EBITDA ~20.1%, operating ~19.6%, net ~11.9% TTM. The blended margin is held down by the low-margin Supply Chain segment; the franchise royalty streams are far more profitable.
- Earnings: net income $601.7M FY25 (+3.0% on $584.2M FY24); diluted EPS $17.57 vs $16.76. Note Q1'26 net income fell 6.6% YoY to $139.8M — but that was driven by a $30M unfavorable swing in the mark-to-market of Domino's stake in DPC Dash (its China master franchisee), not operations; income from operations rose 9.6%.
- Cash flow: operating CF $792M, capex only −$121M, FCF ~$672M FY25 (a ~6.3% FCF yield on the current cap). Asset-light model throws off a lot of cash.
- Balance sheet (the caution): total debt $5.23B, net debt $4.80B, net-debt/EBITDA ~4.9× — high. Book equity is negative (−$3.9B), the normal result of years of debt-funded buybacks in a securitized-franchise structure; it is not a solvency alarm by itself (interest coverage ~5.0×, current ratio 1.6×), but it does limit financial flexibility and amplifies equity risk. The leverage ratio management reports was 4.3× in Q1'26 (down from 4.9× a year ago).
6. Valuation — priced in or room?
DPZ trades at 17.8× trailing EPS, 3.1× EV/sales, and 15.2× EV/EBITDA — full-ish for a ~5%-revenue-grower, but not egregious for a business with ~58% ROIC and ~$672M FCF. On live consensus the forward P/E is ~16× (FY26E $19.19) → ~15× (FY27E $20.94) → ~11× (FY30E $27.78) — the multiple compresses as buybacks and modest growth lift EPS, even at a flat price. A reverse read: at ~18× trailing on ~10% forward EPS growth, the PEG is unremarkable — you are paying a fair price for quality and cash returns, not a bargain and not a bubble. Street targets (context): consensus $418, high $540, low $315 — the current price sits right at the low end, i.e. the Street is more optimistic than the price action. Our ~$340 base FV is deliberately below consensus because we haircut the multiple for decelerating same-store sales and heavy leverage. Not a value buy; a fair-price-for-quality name that needs a growth re-acceleration (or a cheaper entry) to be compelling.
7. Technicals (from the tech block)
- Trend: down. $311.66 sits below the 50-DMA ($316.7) and well below the 200-DMA ($382.6), and the 50 is below the 200 (death-cross posture). MACD −5.35 (negative).
- Location: −35.8% off the 52-week high ($485.53), only +10.1% off the 52-week low ($283.03) — a broken downtrend near its lows, with a brutal −44.8% max drawdown from peak.
- Momentum: RSI(14) ~50 — neutral; neither oversold nor overbought, so no mean-reversion signal either way.
- Relative strength (the tell): DPZ −31.9% 12-mo vs SPY +20.6% and QQQ +30.3%; −13.8% 3-mo vs SPY +13.7%. Persistent, severe underperformance of both the market and growth indices.
- Read: technicals do not confirm a buy — this is a falling knife that has stopped near support but shows no reversal. No golden-cross, no positive MACD, no relative strength. A patient buyer would want to see the price base and reclaim the 50-DMA (~$317) before treating the downtrend as over.
8. Moat & competitive position
Domino's moat is real: (1) scale — the largest pizza chain in the world, with the purchasing power and supply-chain infrastructure to undercut smaller rivals on cost; (2) best-in-class franchisee-level profitability, which management repeatedly cites as its structural edge and which keeps its franchise system healthy and expanding; (3) a delivery/technology infrastructure (its own ordering platform and loyalty program) built over a decade. The competitive frame is a fragmented QSR-pizza category (Pizza Hut, Papa John's, Little Caesars, plus regional and independent players) increasingly pressured by third-party delivery aggregators (DoorDash, Uber Eats) that erode Domino's historical delivery advantage. Management's own Q1'26 language — "intensifying macro and competitive environment" — is a candid acknowledgment that the moat is being tested at the margin.
Peer set (FMP-supplied, market cap): the FMP peer list is a generic consumer-cyclical basket rather than a clean restaurant comp — Texas Roadhouse ($12.8B, the closest restaurant read), Yum China ($14.6B), SharkNinja ($21.4B), Hyatt ($18.2B), Wynn ($10.0B), Chewy ($8.6B), Toll Brothers ($14.7B), Magna ($17.1B), H World ($12.9B), Ball ($16.9B). Treat these as size peers, not business comps; the relevant competitors above (Yum-owned Pizza Hut, Papa John's, privately-held Little Caesars) are the real frame.
9. Management, capital allocation & guidance
- Capital allocation: disciplined return-of-capital. FY25 returned ~$358M in buybacks and ~$237M in dividends (~$595M combined, ~89% of FCF). In Q1'26 the Board added a new $1.0B repurchase authorization (total ~$1.29B available) and raised the quarterly dividend to $1.99/share. This is the core of the DPZ equity story: shrink the share count and pay a growing dividend, funded by a securitized, debt-heavy balance sheet. It works well while rates and cash flows cooperate; the 4.9× net leverage is the cost.
- Insider activity: the sampled window (through 2026-07-01) shows routine grants/awards and small option-exercise-and-sell transactions by officers (e.g. the CTO's June 2026 exercise-and-sale at ~$312) — normal compensation-driven activity, no cluster of alarming discretionary selling.
- Management's own guidance (half-weighted — they talk their book): the Q1'26 earnings release (SEC 8-K, filed 2026-04-27) is a real earnings release and reads as one. Management did not issue explicit forward revenue/EPS guidance in it; instead CEO Russell Weiner reaffirmed a qualitative outlook: confidence that Domino's "can continue to outperform our competition and take meaningful share in 2026 and beyond," anchored on scale and store-level profitability. Concrete figures disclosed were operational (US SSS +0.9%, international SSS −0.4%, global net store growth +180, income from operations +9.6%) rather than forward targets. Treat as management's self-interested framing; no hard numeric guidance was provided, so we do not manufacture any.
10. Catalysts & what to watch
- Next earnings: 2026-07-20 (Q2'26; Street EPS $4.25, revenue ~$1.18B). The key line: US same-store sales — does it re-accelerate above ~1%, or stall?
- International same-store sales: Q1'26 turned slightly negative (−0.4%); a second negative quarter would confirm a broader demand problem.
- Net store growth: the international unit-growth engine (161 net opens in Q1'26) is the main volume driver — watch for any slowdown.
- DPC Dash (China) mark-to-market: its swings distort reported net income quarter to quarter; separate operations from the mark when reading the print.
- Buyback pace + leverage: how aggressively management deploys the new $1.29B authorization, and whether net-debt/EBITDA drifts back up.
Thesis tripwires (what would change the call): two consecutive quarters of negative US same-store sales; net-debt/EBITDA rising back above ~5.5×; FCF failing to cover the dividend + buyback; or a decisive competitive share loss to aggregators. Conversely, US SSS re-accelerating to ~3%+ would upgrade the growth score and the verdict.
11. Key risks
- Growth stall (structural): US SSS near zero and international slightly negative in Q1'26. A mature core market with limited unit headroom is the central bear case.
- Leverage: net-debt/EBITDA ~4.9× and negative book equity leave little cushion if cash flows wobble or rates stay high; refinancing the securitized notes at higher rates would pressure the return-of-capital math.
- Competition / disintermediation: third-party delivery apps erode Domino's historical delivery moat; value-focused QSR competition pressures order counts. Management itself flags an "intensifying competitive environment."
- Valuation de-rating: at ~18× trailing, a decelerating grower can compress toward the low-teens (our bear multiple) on any disappointment — the stock is already −45% from peak, evidence the market will re-rate hard.
- Macro sensitivity: a consumer-spending pullback hits order frequency; "cyclical" is in the sector name.
- No expert coverage: zero Synthos KB breadth means no independent, high-skill voices corroborate (or contradict) the quant read — lower conviction by construction.
12. Verdict, position sizing & monitoring
Watch. Domino's is a genuinely high-quality, high-return franchise (40% gross margin, ~58% ROIC, ~$672M FCF, disciplined buybacks) trading at a fair-not-cheap ~18× after a painful −32% year. But the growth engine has cooled to low-single-digit same-store sales, leverage is heavy at 4.9×, forward growth is only ~5% revenue / ~10% EPS, the technicals are a confirmed downtrend, and there is no expert coverage in the Synthos KB to raise conviction. That combination — good company, fair price, stalled growth, high leverage, no independent corroboration — is the textbook definition of a Watch, not a Buy.
- What would move it to Buy: US same-store sales re-accelerating toward ~3%+ (growth-quality upgrade), or a price pullback into the low-$200s (where the FCF yield and buyback math get compelling and the margin of safety widens). Either would flip the risk/reward.
- Sizing: if an investor already owns DPZ for its dividend and cash returns, a small ~1–2% income/defensive satellite is defensible. We would not initiate a core position at $311 today.
- Monitoring: re-underwrite on the §10 tripwires; formal re-score at the 2026-07-20 print. This verdict is logged as a tracked Synthos call as of 2026-07-03 at $311.66.
- Single biggest risk: the US same-store-sales stall — if the core market stays flat while competition intensifies, a still-premium, highly-levered stock can keep drifting lower.
Provenance & disclosures
- Traceability: 0 KB claims, breadth 0 — no expert voices in the Synthos knowledge base for DPZ. This note cites no
claim_ids because none exist; the verdict is explicitly fundamentals- and quant-driven, and fabricated conviction is structurally impossible (claim-ID reconciliation). - Data as-of: fundamentals 2026-03-22 (Q1'26) · estimates & prices 2026-07-02/03 · no expert claims. Forward figures are analyst consensus (FMP), labeled as estimates.
- Management caveat: the Q1'26 SEC 8-K earnings release provided qualitative outlook only (no hard numeric guidance); management's words are self-interested and half-weighted by design.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").