Domino's Pizza Stock Is Down 32% and Still the Dominant Player. Here's Why I'd Buy Now.

It can prove psychologically difficult to buy a stock whose price has dropped, particularly when the market has been strong. A share price drop indicates the market has concerns.

Determining their validity is where an investor can make smart decisions. If the company retains a strong market share and the long-term business prospects remain bright, it's a buying opportunity.

Domino's Pizza (NASDAQ: DPZ) is in this exact position. The share price has dropped more than 32% over the last year, through July 2. That's well below the S&P 500's (SNPINDEX: ^GSPC) 20% gain.

Here's why this market-dominant company's stock should bounce back strongly, offering significant upside.

Image source: Getty Images.

Expanding market share

Domino's Pizza has the largest market share in the quick-service restaurant pizza category, with 23.3% of the U.S. market in 2025, up from 22.5% the previous year. It had leading 32.9% and 19.6% shares in delivery and takeout, respectively.

Management wants to expand market share, too. With value pricing and convenience, it aims to gain share from competitors such as Pizza Hut, Papa John's International (NASDAQ: PZZA), and Little Caesars.

Recent sales have been sluggish, however. First-quarter U.S. same-store sales (comps) grew 0.9%, and international comps dropped 0.4%.

But it's important to remember that consumer spending has been squeezed by macroeconomic pressures, such as higher tariffs and energy prices. And competitor Papa John's International also saw sales struggle, with North American comps dropping 6.4% in the first quarter, although international locations saw a 3.6% increase.

Expanding locations

While Domino's waits for economic conditions to improve, management isn't sitting idle. It's pursuing expansion opportunities. In business since 1960, its focus on convenient, affordable offerings has certainly resonated with people.

Over the last year, through the end of March, the company added 964 locations, bringing the total to over 22,300. The majority of additions, 790, were international restaurants.

With 99% of its global restaurants franchised, Domino's can expand in a capital-efficient manner. That's because franchisees pay an up-front fee and an ongoing royalty (a percentage of sales) to Domino's. They also make initial investments to build the restaurant.

Adding it up

If there weren't broad economic issues affecting industry sales, I would be concerned about Domino's weak comps. While no one knows when consumers will feel better about their situation and increase discretionary spending, it will happen at some point.

When it does, with Domino's leading market share, the company is in a prime position to see its sales rebound, and you can look for the shares to reward patient investors.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino's Pizza. The Motley Fool has a disclosure policy.