Domino's Pizza

Domino's Pizza is the textbook 'cheap quality compounder gets cheaper' story of 2026. The stock closed at $313.22 on May 12, 2026 — within 1% of its 52-week low at $310.06 and -37% off the December 2024 peak at $499. Berkshire Hathaway revealed its DPZ position in the Q3/2024 13F (1.28M shares, roughly $560M at entry), and the position has held steady through the drawdown. No 13F filing since has shown a trim.

The fundamentals that matter: Q1/2026 EPS came in at $4.42 vs. $4.31 consensus, US same-store comps were +1.2% (vs. +1.0% expected), and international comps were +1.8%. Revenue grew 3.5% YoY — slow but positive. Franchise margins held at 38.7%. The reason the stock is at the low: management cut full-year 2026 guidance from 5–7% revenue growth to 3–5%, citing US foot-traffic softness and the GLP-1 narrative pressure on quick-service.

The asset-light franchise economics remain intact. Domino's collects royalties on 99.7% of stores (the company directly owns only 290 of 21,000+ stores worldwide) and runs an $4.1B supply-chain segment with 27% margins. Free cash flow Q1/2026: $131M. The dividend was raised 14% to $1.99 quarterly in February 2026 — the 13th consecutive annual increase.

Berkshire's DPZ entry in Q3/2024 came at $420–$440 per share, meaning the position is currently underwater roughly 25–28%. The Q1/2026 13F (filed May 15, 2026) showed Berkshire kept the full 1.28M-share position — neither added nor trimmed. The non-action during a 37% drawdown is the meaningful signal: Berkshire does not panic-sell quality franchises during cyclical earnings dips.

Notable accompanying activity: Akre Capital Management added 410,000 shares in Q1/2026 (their largest restaurant position), and Pershing Square (Bill Ackman) initiated a 1.1M-share position in February 2026 disclosed in March. Wedgewood Partners and Polen Capital both added incrementally. The hedge-fund 13F community is leaning into the dislocation, while index-fund flows have been net seller of -3.2M shares over six months.

Insider activity (Form 4): CEO Russell Weiner bought 5,500 shares in March 2026 at $338 (first open-market insider buy since his 2022 appointment). CFO Sandeep Reddy bought 2,000 shares at the same window. Two independent directors also added 1,500 and 1,000 shares respectively. Five insider buys in 60 days — the heaviest cluster since the 2008 IPO.

Domino's trades at a forward P/E of 14.9, EV/EBITDA of 15.3, and price/free-cash-flow of 19.8 as of May 2026. Comparable asset-light franchise restaurants — McDonald's (forward P/E 23, EV/EBITDA 18), Chipotle (forward P/E 38, EV/EBITDA 28), and Yum Brands (forward P/E 22, EV/EBITDA 19) — all trade at meaningful premia. The 35–50% discount reflects three real concerns: US traffic softness, GLP-1 headwind, and earnings-growth deceleration. The Wall Street median price target is $414.90 (32.5% upside) — the dispersion is moderate, with Wells Fargo at $315 (bear) and Morgan Stanley at $544 (bull). Sum-of-the-parts: US franchise royalties at ~$200/share, international franchise at ~$140/share, and the supply-chain segment at ~$80/share — implying $420 intrinsic value. Combined with the 2.54% dividend and ~3% buyback yield (the company repurchased $580M over the past 12 months), total capital return runs at roughly 5.5% before any earnings growth or multiple rerating.

1. July 24, 2026: Q2/2026 earnings — US same-store traffic is the make-or-break KPI; positive print would break the GLP-1 narrative
2. October 2026: Investor Day — management expected to reiterate or revise the long-term 8%+ EPS-CAGR framework
3. Q4/2026: Berkshire 13F filing — any incremental add at these levels would be a major positive signal

Domino's at $313 is the exact setup I look for: a quality compounder, beaten down on cyclical concerns, with smart-money still holding and insiders buying. Berkshire's non-trim during a 37% drawdown is the most informative signal in the data. The GLP-1 concern is real but overstated — Domino's is delivery-led (75% of US sales) and the demographic that orders delivery pizza skews younger and lower-BMI than the GLP-1 patient base. My add-trigger is below 14× forward P/E (roughly sub-$295), which would be a 'back up the truck' price if the broader market doesn't break. Be patient with this one — the rerating won't come from a single earnings print, but from three quarters of stable US traffic plus continued buybacks shrinking the share count.