# Domino's (DPZ)

Sector: Restaurants

| Field | Value |
|---|---|
| Price | $304.96 |
| Fair value (Analysts) | $365.00 |
| Discount to fair value | 16.4% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | Wide |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.44 |
| Data as of | 2026-10-15 |
| Next earnings | 2027-02-22 (estimate) |

## In short

US sales have almost stopped growing and franchisees open fewer stores, and a return to low-single-digit US sales growth in 2027 can close the gap.

## Themes and gap

- Themes: Weak consumer (weak-consumer), High debt (leverage), New management (management-change)
- Gap type: Can close (closable)
- Why: The Q4 2026 report with the 2027 outlook and the refinancing before July 2027 show whether US sales and store growth recover.

## About

Domino's is the largest pizza company in the world, with 22,706 stores in more than 90 markets at September 6, 2026. Independent franchisees own 99% of the stores. Domino's earns royalties and fees, which are a percentage of each store's sales, and it sells dough, food and equipment to its US and Canadian franchisees from its own supply chain centers. In the first three quarters of 2026, the supply chain gave about 62% of revenue, but at a low margin, while royalties and fees gave most of the profit. Outside the US, master franchisees run the stores in each country and pay royalties to Domino's. Customers order mostly online, for delivery or carryout. Global retail sales of all stores were more than $20.7 billion in the four quarters to September 6, 2026. Joe Jordan became CEO on October 1, 2026.

## Thesis

Domino's trades at a discount because its US sales have almost stopped growing while consumers spend less, and because lower franchisee profit slows the opening of new stores, which is how Domino's grows. US same-store sales grew only 0.9%, 0.1% and 0.3% in the first three quarters of 2026, with lower average tickets and fewer items per order. On October 13, 2026, Domino's lowered its 2026 target to 125 to 150 net new US stores, and the CFO said that franchisee profit fell in dollars from last year. International same-store sales were about flat, because the largest master franchisee, Domino's Pizza Enterprises, had problems. For the gap to close, US same-store sales must return to the low-single-digit growth that management targets, franchisee profit must grow again so that US openings speed up toward the long-term goal of 8,500 or more US stores, and international sales must recover in 2027. Domino's must also refinance about $1.32 billion of notes due in July 2027, which it expects to do at a higher interest rate. The first test is the Q4 2026 report with the 2027 outlook, which management said will come in February 2027, and the refinancing before July 2027. If US sales and franchisee profit recover, the gap can close over the next four to six quarters. The main risk is that weak low-income consumers and pizza price competition keep US sales flat for longer.

## Checkpoints

- Feb 22, 2027 (estimate): Q4 2026 results and 2027 outlook. Status: Pending. Watch: US same-store sales growth above 1% and a 2027 outlook with more net new US stores than in 2026 pass; flat US sales or another cut to store growth fails.
- Q2 2027 (estimate): Q1 2027 results: US sales and international recovery. Status: Pending. Watch: US same-store sales growth in the low single digits and positive international same-store sales pass; another quarter below 1% in the US fails.
- Jul 2027 (estimate): Refinancing of the notes due July 2027. Status: Pending. Watch: A refinancing of the $1.32 billion of notes before July 2027 at an interest rate that keeps leverage near 4 times passes; a delay or a much higher cost that cuts buybacks fails.

## Balance sheet

- Cash: $229M
- Debt: $4.8B
- Net debt: $4.5B
- EBITDA, last 12 months: $1.1B
- Net debt / EBITDA: 4.0× (high)
- Interest cover: 5.1×
- Undrawn credit line: $249M
- Debt due within 12 months: $1.3B
- Last debt due: 2032

Almost all of Domino's debt is securitized notes, which the royalties, fees and supply chain income of its US and international business secure. The fixed-rate notes were $4.77 billion at September 6, 2026, and the leverage ratio defined in the notes was 4.2 times trailing EBITDA, down from 4.5 times a year earlier. The CFO said on October 13, 2026 that Domino's is comfortable below the low end of its leverage target of 4 times while interest rates stay at current levels. The 2017 Ten-Year Notes ($940 million) and the 2018 9.25-Year Notes ($379 million) have an anticipated repayment date in July 2027, so they are current debt. Domino's expects to refinance them before that date, at a higher interest rate. Scheduled principal payments are $836 million in 2028, $648 million in 2029, $495 million in 2030, $928 million in 2031 and $470 million in 2032. The variable funding notes allow up to $320 million, with nothing drawn and $248.9 million available after letters of credit. Cash excludes $168 million of restricted cash. Interest cover is for the first three quarters of 2026. In those quarters, free cash flow was $460 million and buybacks were $305 million, and $1.15 billion of buyback authority was left. The stockholders' deficit of $3.96 billion comes from past recapitalizations and buybacks.

As of 2026-09-06.

Sources:

- https://www.sec.gov/Archives/edgar/data/1286681/000128668126000040/dpz-20260906.htm
- https://www.sec.gov/Archives/edgar/data/1286681/000128668126000039/dpz-ex99_1.htm
- https://www.investing.com/news/transcripts/earnings-call-transcript-dominos-tops-q3-2026-estimates-but-shares-fall-93CH-4946954

## Recent events

- 2026-10-13: Domino's reported Q3 2026 results. Revenue was $1.19 billion, up 3.4%, and diluted EPS was $4.60, up 12.7%. US same-store sales grew 0.3% and international same-store sales grew 0.2%. Domino's lowered its 2026 target to 125 to 150 net new US stores and said that international same-store sales will be about flat for the year. The shares fell in trading before the market opened.
- 2026-10-06: The board declared a quarterly dividend of $1.99 per share, payable on December 30, 2026.
- 2026-10-01: Joe Jordan, the former Chief Operating Officer and President of Domino's US, became CEO. Russell Weiner became Executive Chairman Designate. Domino's announced this plan on June 22, 2026.
- 2026-07-20: Domino's reported Q2 2026 results. Revenue was $1.19 billion and diluted EPS was $4.07, up from $3.81. US same-store sales grew 0.1% and international same-store sales fell 0.1%. The CEO said that the US fast-food industry had weak consumer demand.
- 2026-07-14: The board added two directors and made Corie Barry its Lead Independent Director.
- 2026-04-27: Domino's reported Q1 2026 results. US same-store sales grew 0.9% and international same-store sales fell 0.4%. The board approved a new $1.0 billion share buyback program.

## Risks

- High: US consumers spend less on fast food. US same-store sales grew less than 1% in each of the first three quarters of 2026, and customers bought fewer items per order. Competitors also use deep price promotions. If sales stay flat, royalties grow only from new stores.
- High: Franchisee profit fell in dollars in 2026, and Domino's lowered its 2026 target for net new US stores to 125 to 150 on October 13, 2026. New stores are the main source of growth. If franchisees open fewer stores in 2027, both royalties and supply chain sales grow more slowly.
- Medium: Domino's has high debt. Its $4.77 billion of securitized notes were 4.2 times EBITDA at September 6, 2026, and its stockholders' deficit was $3.96 billion. About $1.32 billion of notes have an anticipated repayment date in July 2027, and Domino's expects to refinance them at a higher interest rate. If it does not refinance in time, the notes add interest of at least 5% a year, and almost all securitized cash flow goes to repay the debt.
- Medium: International sales depend on large master franchisees. Domino's Pizza Enterprises had problems in 2026, and the CFO did not expect it to improve meaningfully until 2027. A strong US dollar also lowers the value of foreign royalties.
- Low: The CEO changed on October 1, 2026, and the Executive Chairman will retire in 2027. A new CEO can change pricing, marketing or the store growth plan. Higher cheese and other food costs can also lower franchisee profit.

## Links

- Page: https://picks.kamadorueda.com/company/DPZ/
- History of changes: https://picks.kamadorueda.com/company/DPZ/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/DPZ.json

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