Domino's Pizza Stock Has Essentially Gone Nowhere for 5 Years. Is It Finally Time to Buy?

Key Points

• Domino's is regaining U.S. sales momentum after a soft start to 2025.

• Aggregator distribution, new menu items, and loyalty are helping demand.

• Shares trade around mid-20s times earnings, leaving limited room for mistakes.

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After a monster run in the 2010s, Domino's Pizza (NASDAQ: DPZ) hasn't delivered much over the last half-decade. Including dividends, the pizza delivery specialist's five-year total return is roughly 10% -- essentially flat when stacked against inflation -- and quite disappointing when compared against the broader market's gains. Meanwhile, the underlying business has continued to expand its footprint, modernize the brand, and lean into delivery and carryout economics. The question for investors is whether recent progress is enough to turn a sideways stock into an attractive buy.

There are some positive signs. Domino's started 2025 with softer U.S. trends, then posted a better second quarter, helped by product introductions, broader distribution on delivery apps, and steady international growth. That improved cadence sets the stage for the rest of the year. But given where the stock trades, it will probably still take more than "better" to make the shares compelling.

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Image source: Getty Images.

Momentum is improving

The most recent quarter shows progress in two key areas: sales and operations. In the second quarter of 2025, Domino's reported U.S. same-store sales growth of 3.4%, with international comps up 2.4% (currency-neutral). Total revenue rose 4.3% to about $1.15 billion, and income from operations increased nearly 15%, aided by strong franchise royalties and supply chain throughput. Management also pointed to healthy unit economics and robust advertising support as the company fully rolled out on the two largest delivery aggregators and expanded its menu, including stuffed crust.

"In the U.S., both delivery and carryout grew, driving meaningful market share gains," Domino's CEO Russell Weiner said alongside the report, adding that the business is "well-positioned" with more tools than ever to drive long-term value.

The bounce-back followed a choppy first quarter in which U.S. comps dipped 0.5% and the system posted a small net store decline (driven by international closures). Even there, though, international comps grew 3.7% (currency-neutral), and growth in franchise royalties and supply chain revenue supported the top line. The sequential improvement from Q1 to Q2 -- both in comps and operating income -- matters more than a single quarter's print and suggests promotional cadence, menu news, and aggregator awareness are gaining traction.

Looking ahead, two strategic levers look durable.

First, access via third-party apps broadens the funnel for occasional customers while keeping the core Domino's digital stack intact for loyal buyers; management now has both Uber's (NYSE: UBER) Uber Eats and DoorDash (NASDAQ: DASH) live at national scale.

Second, value and innovation continue to attract traffic; rewards program enhancements and items like parmesan-stuffed crust provide the brand with fresh reasons to be in the consideration set without relying solely on price. Those moves helped delivery comps turn positive in Q2.

Valuation and risks

Despite good underlying performance and massive underperformance for the stock over the last five years, the pizza delivery king isn't a clear buy. As of this writing, Domino's stock has a price-to-earnings ratio of about 25 -- about in line with its historical average multiple. Sure, 25 isn't particularly high for a high-return, asset-light franchisor, but it does limit returns if growth slows or margins compress.

Further, there are some key risks. Cost inputs and store-level labor, for instance, can pressure company-owned store margins. Indeed, this key profitability metric was down two full percentage points, year over year, in Q2. Additionally, international expansion -- one of Domino's biggest catalysts over the last few decades -- has seen pockets of volatility, including net closures earlier this year. Finally, while aggregators expand reach, they can complicate ticket dynamics and the customer experience if not managed carefully. Of course, none of these are new issues for Domino's. But they help explain why a price-to-earnings ratio of 25 isn't necessarily cheap.

So, is it finally time to buy? The investment case rests on steady mid-single-digit same-store growth, continued net unit additions, and operating-income expansion as supply chain and franchise royalty dollars grow with retail sales. If Domino's can sustain the Q2 trajectory -- positive delivery and carryout comps, healthy international trends, and incremental traffic from aggregators -- the current mid-20s price-to-earnings ratio may prove reasonable. But if momentum fades back toward flat U.S. comps or international volatility intensifies, that valuation could look full.

For investors interested in the stock, despite the risks, a measured approach makes sense. With trends improving, Domino's looks like a decent stock idea -- just not a clear bargain. A small starter position, with an eye toward adding on market or company-specific pullbacks, could be a sensible way to participate while giving the story room to prove it can compound again.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino's Pizza, DoorDash, and Uber Technologies. The Motley Fool has a disclosure policy.