Domino's Pizza Stock Fell After Reporting Disappointing Sales. Should Investors Buy the Dip?

Domino's Pizza (NASDAQ: DPZ) is a business generating constant cash flow, so it's easy to see why Berkshire Hathaway owns around 10% of the company. It's also attractive as an asset-light business that is expanding globally and pays a dividend yielding 2.3%.

But even with the Berkshire vote of confidence, that hasn't equated to a rising stock price. After its Q1 2026 earnings release on April 27, the stock price dipped, leaving investors to wonder if it was an overreaction to short-term results that is creating a buying opportunity.

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What happened with the first-quarter results

For shareholders, one of the few bright spots in the report was an update on stock buybacks. The board authorized $1 billion in share buybacks, which is in addition to the roughly $290 million remaining from a previous authorization.

Outside of the stock buyback news, there wasn't much to cheer. Revenue of more than $1.1 billion was slightly below analysts' expectations, while adjusted earnings per share of $4.13 also fell short of the $4.26 that was expected. Same-store sales growth in the U.S. was 0.9%, well below analysts' expectations of 2.6%. For same-store sales growth in Domino's international operations, the 0.4% reported was also short of the 0.7% expected.

Management acknowledged it wasn't a great quarter, citing growing consumer uncertainty, as well as other issues, impacting results. "Consumer sentiment hit COVID-level lows, and ongoing inflation continued to impact purchase decisions," CEO Russell Weiner said during the company's earnings call.

The Domino's dip may not be over

Some of the issues Domino's faced in Q1 2026 are not issues that may impact results as heavily in other quarters. The company noted seasonal weather played a factor in the results, and winter weather will be less of a worry at least until the end of 2026. Also, while the pizza maker saw increased competition, it believes comparable deals offered by rivals may not be sustainable, which may even lead to competitors closing stores.

Consumer sentiment, which is weighing heavily on the business, is, however, a long-term concern, as it might not change if inflation remains stubborn. Domino's will have to rely more on opening stores to boost business if it can't squeeze more sales out of its current locations, which can be a slippery slope. Opening new stores can be plagued by delays and cost increases, and a new location may not work out as well as anticipated.

With the sour consumer sentiment and the reliance on new stores opening, it seems like this is a buy-the-dip moment only for those with the strongest convictions in Domino's, as a rebound may not happen anytime soon. At least over the next year, there doesn't appear to be many catalysts to help the stock price climb outside of Domino's significantly outperforming expectations in each of the quarters ahead.

Jack Delaney 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.