Near Its 52-Week Low, Domino's Is Flashing a Signal Long-Term Investors Shouldn't Ignore

Domino's Pizza (NASDAQ: DPZ) has not delivered for investors in 2026, but it is flashing a signal that long-term investors should take note of.

The world's largest pizza chain has been struggling over the past few years. This year, the stock price has plummeted 25% year to date as of June 19 and is trading at $312 per share, which is close to a 52-week low.

But even more notable is its valuation. Domino's stock is trading at 17 times earnings and 16 times forward earnings. That is not only a 52-week low valuation but also the lowest valuation for Domino's stock in more than 10 years.

The last time the price-to-earnings (P/E) ratio was this low was in 2012, some 14 years ago. Does this mean that Domino's stock is a buy?

Image source: Getty Images.

Domino's stock is as cheap as it's been in years

Domino's stock really tanked in late April after the pizza chain released first-quarter earnings that missed revenue and earnings estimates. Overall, global sales were up about 3.5% year over year. U.S. sales were up 3%, with same-store U.S. sales increasing 1%. The miss was mainly due to lower international sales, as international same-store sales were down 0.4%.

Also, Domino's lowered its U.S. same-store growth guidance for the fiscal year from 3% to a more nebulous low-single-digits range -- which could be 3%, but it sounds worse. It cited macroeconomic pressures and challenges. Overall global sales are targeted for mid-single digits.

Domino's has been investing heavily in its website and app to increase its digital sales, including a new, more intuitive app. Last year, online orders accounted for 85% of all sales in the U.S.

It has also expanded its relationship with third-party delivery services, adding DoorDash as a delivery provider, along with Uber Eats. The third-party delivery services expand Domino's market and result in higher margins, as third-party orders are, on average, higher due to a premium placed on menu items ordered through third-party apps.

Also, in Q1, Domino's increased its gross margin by 60 basis points year over year to 40.4% due to strong expense management and lower costs of sales. Further, CFO Sandeep Reddy said on the earnings call that the operating margin will continue to expand this year.

Also worth noting is that a challenging economic environment could lead more budget-conscious families to seek cheaper options to feed their families.

Domino's stock is a compelling option worth considering given its decade-low valuation, its expense management, and its digital and third-party delivery strategies. Wall Street analysts see the stock as a buy, with a median price target of $400 per share, which would suggest 28% upside.

Dave Kovaleski has 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.