Shares of Domino's Pizza, Inc. DPZ have gained 9.9% in the past three months compared with the Zacks Retail - Restaurants industry’s rise of 4.2%. Over the same timeframe, the stock has outperformed the S&P 500’s rally of 8%.

DPZ is riding on a solid digital ordering system, the Hungry for MORE strategy and a resilient asset-light model. Also, steady growth in store expansions and profitable order count are aiding investor sentiments.

3 Months DPZ Stock Price Performance

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Technical indicators suggest a continued strong performance for DPZ. The stock is trading above its 50-day moving average, signaling robust upward momentum and price stability.

DPZ Stock Trades Above 50-Day Moving Average

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Yet, DPZ is still trading 16.5% below its 52-week high of $542.75. So, should investors pour more capital into Domino's now? Let us take a closer look.

What’s Cooking for Domino’s Success?

Domino's recent performance is anchored by its Hungry for MORE strategy, which prioritizes renowned value, innovation and market share growth.

DPZ has successfully leveraged its renowned value offerings like the MOREflation deal and 50% off promotions, resonating strongly with value-conscious consumers amid economic pressures. The company's loyalty program, Domino's Rewards, has significantly expanded its active user base, driving repeat purchases and boosting overall frequency. Additionally, partnerships with aggregators like Uber Eats are leading to an incremental sales mix.

Store expansions are fuelling growth, with Domino's opening approximately 1,750 stores since 2015. This expansion reinforces its position as a market leader and ensures long-term profitability for franchisees.

While the international segment (representing about half of global retail sales) has faced challenges from macroeconomic and geopolitical pressures, the company's asset-light master franchising model limits the impacts on overall profitability. Through proactive engagement with master franchisees, Domino's is implementing strategies to enhance value messaging, maximize aggregator orders, and diversify into carryout and dine-in options in key markets. The company also focuses on initiatives like Emergency Pizza 2.0 and targeted value-driven promotions to attract a broad customer base, including price-sensitive segments.

Domino’s expects U.S. same-store sales growth of 3% or more for fiscal 2024, supported by its strong pipeline of promotions and innovative product launches. The company's ability to consistently create its tailwinds, evidenced by its Hungry for MORE strategy, positions it well for sustained growth and shareholder value creation.

DPZ’s Hurdles: Macroeconomic & Competition Pressures

Domino’s international business, which contributes nearly half of global retail sales, is facing significant challenges. The company’s operations are facing a slowdown due to geopolitical tensions, macroeconomic pressures and underperformance in key markets such as Asia, Europe and the Middle East.

DPZ revised its 2024 global net store growth guidance from 825-925 to 800-850 due to challenges in the international markets. Lower-than-expected unit growth in fiscal 2024 could affect revenues and profitability growth.

In the United States, Domino’s growth faces increasing competition from established quick-service restaurant chains and aggregators. Aggressive promotions by competitors, such as free delivery and alternative value-focused deals, are putting pressure on Domino's market share.

DPZ’s Valuation & Estimates

Domino’s is trading at a discount relative to industry peers like Starbucks Corporation SBUX, Kura Sushi USA, Inc. KRUS and Dutch Bros Inc. BROS. DPZ is trading at a forward 12-month price-to-earnings (P/E) multiple of 25.76X, below the industry average of 26.32X.

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The Zacks Consensus Estimate for the company’s fiscal 2024 earnings per share (EPS) increased from $16.74 to $16.82 in the past 60 days. In the same period, the consensus mark for fiscal 2025 EPS has moved from $17.64 to $17.63.

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DPZ Investment Verdict: Hold for Now

Domino's is well-positioned for long-term growth, supported by its Hungry for MORE strategy, digital innovation and steady store expansion efforts. However, challenges such as geopolitical pressures, slowing international growth and intensified competition in the U.S. market could weigh on its near-term performance.

While Domino’s strengths and reasonable valuation inspire investor optimism, caution is advised. The stock’s exposure to macroeconomic uncertainties and softer performance in certain markets calls for a careful evaluation of ongoing developments before making new investment decisions. For current shareholders, retaining this Zacks Rank #3 (Hold) stock in their portfolios may be a prudent choice, given its long-term growth potential.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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