Can Domino's Pizza Kick Back Into High Gear in 2026?

This has been an uncharacteristic year for Domino's Pizza (NASDAQ: DPZ). Shares of the global pizza chain are trading virtually flat in 2025 (down 0.6%), while the S&P 500 has continued to rip higher to the tune of 16.4% year-to-date. Domino's Pizza has outperformed the famous index by a comfortable margin (280% to 232%) over the past decade.

So, what gives? More importantly, is the stock's slump -- shares trade 26% off of their early-2022 all-time high -- a buy-the-dip opportunity? Or has Domino's Pizza's business gone cold and stale?

Explaining the stock's struggles

To put it simply, the stock has languished because growth has slowed. Global sales growth has decelerated to 5.5% through nine months of 2025 from 6.5% last year. It has been notably worse in the United States, where same-store sales growth has slowed to 2.7% from 4.5% in 2024.

Domino's Pizza traded at a price-to-earnings (P/E) ratio of more than 34 mid-last year, a high valuation for a fast-food stock. It probably shouldn't surprise anyone that slowing growth has let the hot air out of the balloon.

But Domino's Pizza is hardly the only restaurant in a slump; several leading chain brands are struggling as Americans cut back amid soaring living expenses. The company could even take business away from other restaurants because pizza remains one of the most cost-effective meals for feeding groups of people, a perk in a challenging economy.

A billionaire has been buying the dips

Investors can now view Domino's Pizza in an entirely new light, as the stock's valuation has shifted from a weakness to a potential strength. The P/E ratio has dropped to under 25, almost 25% below its average over the past decade.

Berkshire Hathaway, led by famed investor Warren Buffett until the end of this year, has steadily accumulated an 8.8% stake in the company, and Berkshire's stake is now worth $1.2 billion. The company initially bought shares in the third quarter of last year and has added to its position each quarter since then.

Although someone else's trades are no substitute for one's own homework, it's notable that Berkshire Hathaway, a notoriously value-conscious outfit, has leaned into Domino's Pizza at a time when the company has been aggressively raising cash more so than buying stocks.

Why things could start to look up in 2026

Now that the stock's P/E ratio has cooled off, the stock seems pretty buyable here.

Domino's Pizza's business model hasn't gone stale. It's a well-established franchise business in the pizza industry, which has global appeal, attractive economics (feeding the masses), and remains highly fragmented in the United States, where thousands of mom-and-pop stores struggle to compete with Domino's Pizza's technology and pricing.

Analysts estimate that Domino's Pizza will grow its earnings by 10% to 11% annually over the next three to five years. That translates to 12% to 14% annualized total returns once you factor in dividends, even if its current valuation is the new norm.

The stock's value stands out more now than it did a year ago, setting Domino's Pizza up for a return to its winning ways in 2026 and beyond.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Domino's Pizza. The Motley Fool has a disclosure policy.