Domino’s tops Q4 US sales estimates on value push, shares rise 5%

Domino's Pizza reported stronger-than-expected fourth-quarter US same-store sales on Monday, as aggressive promotions and new menu launches helped draw budget-conscious diners, sending shares up about 5% in premarket trading.

The pizza chain, however, continues to face investor skepticism, with the stock hovering near its lowest level in more than two years amid broader concerns about consumer spending and the restaurant sector.

For the quarter ended in December, Domino’s posted net revenue of $1.54 billion, up 6.4% from a year earlier and ahead of analysts’ expectations of $1.52 billion.

Earnings rose 9.4% to $5.35 per share, slightly below Wall Street estimates of $5.38.

US momentum offsets softer international demand

Same-store sales in the United States increased 3.7% during the quarter, exceeding market expectations and underscoring the brand’s resilience in a challenging environment.

International comparable sales rose 0.7%, falling short of analysts’ projections of a 1.03% increase as demand remained soft in markets such as Australia and Japan.

The company opened a net 392 stores globally in the fourth quarter, helping lift global retail sales by 4.9% from a year earlier, excluding foreign currency impacts.

Chief executive Russell Weiner said the company’s “Hungry for MORE” strategy delivered gains across key metrics.

“In 2025 we demonstrated that when we execute our strategy it delivers more sales, more stores, and more profits,” he said in the earnings statement, noting that Domino’s gained another point of market share in the US pizza-restaurant category.

Consumer caution weighs on restaurant sector

The results come as US restaurants grapple with weaker discretionary spending.

Inflation has squeezed household budgets over the past two years, prompting many consumers, particularly in lower-income brackets, to cook more meals at home rather than dine out.

Even pizza, often seen as an affordable indulgence, has not been entirely immune.

Several chains have reported customers ordering less frequently.

Domino’s has largely bucked that trend by leaning into value-driven promotions.

The company’s “Best Deal Ever” offer, featuring a large pizza for $9.99, was a key driver of comparable sales growth in the second half of 2025, management said.

Rivals have adopted similar tactics.

McDonald's and Yum Brands have rolled out value meals starting at $5 to attract cost-conscious diners, while higher-priced chains such as Chipotle Mexican Grill have reported sales declines amid softer traffic.

Menu innovation and digital push

Domino’s has also focused on menu innovation to drive traffic.

The launch of its Parmesan Stuffed Crust pizza was highlighted as a standout success, boosting both customer visits and average ticket sizes.

The company continues to invest in its digital platforms and loyalty programme, aiming to improve convenience and customer engagement.

Once reliant almost exclusively on its own delivery network, Domino’s has expanded partnerships with third-party delivery platforms in recent years to broaden its reach.

“We expect to meaningfully increase our market share within a US QSR pizza category that continues to grow,” Weiner said, though the company did not provide detailed financial guidance for 2026.

Dividend hike and valuation debate

The board approved a 15% increase in the quarterly dividend to $1.99 per share, payable on March 30, signalling confidence in cash flow generation.

Despite the solid quarterly performance, Domino’s shares have fallen nearly 16% over the past 12 months as investors remain wary about the durability of consumer spending.

Shares trade at roughly 22 times forward earnings, their lowest valuation in at least a decade.

BTIG analyst Peter Saleh reiterated a Buy rating, citing the stock’s compressed valuation.

He lowered his price target to $500 from $530 ahead of the results, implying roughly 30% upside from Friday’s close near $385.

Analysts polled by FactSet have a consensus target of $481.

Saleh noted that while management met prior targets, investors appear cautious about 2026 guidance and are bracing for potential moderation.

"Despite management's success at achieving the target last year, investors are uneasy and have already assumed 2026 guidance will be below the promised range," the analyst wrote on Friday.