Domino's Pizza, Inc. (DPZ): A Bull Case Theory

We came across a bullish thesis on Domino’s Pizza, Inc. on Grillo Insights’s Substack by Eric García. In this article, we will summarize the bulls’ thesis on DPZ. Domino’s Pizza, Inc.'s share was trading at $405.37 as of January 28th. DPZ’s trailing and forward P/E were 23.69 and 20.75, respectively according to Yahoo Finance.

Domino's Pizza, Inc. operates as a pizza company in the United States and internationally. Domino’s Pizza delivered a performance in mid-October 2025 that stood out sharply against a pressured U.S. fast-food backdrop, underscoring the strength of its operating model and long-term strategy. While peers struggled with cautious consumers, Domino’s reported 6.3% global retail sales growth and expanded operating margin to 19.5%, outperforming an industry grappling with profitability.

More importantly, the company unveiled its first major brand refresh in thirteen years, pairing a new visual identity with the “Best Deal Ever” campaign and aggressive promotions that competitors lack the operational capacity to execute. Management emphasized that Domino’s proprietary technology, scale, and supply chain enable complex discounting without disrupting store economics, reinforcing its competitive moat.

With more than 21,750 stores across 90 markets and roughly 20% global quick-service pizza share, Domino’s benefits from an asset-light franchise model that converts scale into cash generation. Over 98% of locations are franchised, allowing the company to earn royalties and supply chain margins while limiting capital intensity.

In the first nine months of 2025, free cash flow rose over 30% year over year, supported by declining capex and digital sales that now represent about 85% of system revenue. This digital infrastructure, combined with vertically integrated dough manufacturing, allows Domino’s to capture “trade-down” consumers seeking value without sacrificing convenience or perceived quality.

Despite elevated leverage at roughly 4.5x EBITDA, Domino’s has demonstrated disciplined capital allocation, with twelve consecutive years of dividend growth and significant share repurchases alongside continued unit expansion. While margin pressure from labor and ingredient inflation remains a risk, the company’s scale, technology, and franchise economics position it to sustain growth and shareholder returns. Overall, Domino’s Pizza represents a high-quality, defensible business benefiting from weak macro conditions rather than suffering from them, offering investors a resilient, cash-generative compounder with multiple levers for long-term value creation.

Previously, we covered a bullish thesis on Domino’s Pizza, Inc. (DPZ) by Tired Salary Bear in April 2025, which highlighted the strength of its franchise-driven, asset-light model, superior unit economics, and long-term free cash flow compounding potential. DPZ’s stock price has depreciated by approximately 12.59% since our coverage due to macro-driven valuation compression and consumer spending concerns. Eric García shares a similar view but emphasizes brand refresh execution, promotional scalability, and near-term defensive positioning.

Domino’s Pizza, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held DPZ at the end of the third quarter which was 42 in the previous quarter. While we acknowledge the risk and potential of DPZ as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DPZ and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.