Hold

US SSS +3.4% Beat, IFO +14.8%, 148 International Store Openings, Hungry for MORE Strategy Executing — Initiating at Hold

Published: July 22, 2025, 8:00 AM ET By A.N. Burrows DPZ | Q2 2025 Earnings Analysis

Key Takeaways

Q2 2025: US same-store sales +3.4% (beat Street ~+3.0%); international SSS +2.4% ex-FX; global retail sales +5.6% ex-FX. Income from operations +14.8% YoY (+14.9% ex-FX) — strong operating leverage on the franchise model.
Net store growth 178 globally (30 US + 148 international) — international unit expansion continuing at strong pace via DPE and master franchisees.
Carryout boost weeks + aggregator partnership + Hungry for MORE strategy collectively driving US execution. Order count + average ticket both positive.
Franchisee profitability remains structurally healthy; Domino's profit power (advertising budget + scale) creates competitive moat vs. national pizza players matching value pricing.
Rating: Initiating at Hold. Solid Q2 execution + structural franchise advantages + dividend growth offset by full valuation (~28x trailing P/E) and intensifying QSR pizza competition. Fair value range $440-490.

Results vs. Consensus

Metric	Q2 2025 Actual	Street	Beat/Miss
US Same-Store Sales	+3.4%	+3.0%	+40bp beat
International SSS (ex-FX)	+2.4%	+2.0%	+40bp beat
Global Retail Sales (ex-FX)	+5.6%	+5.0%	+60bp beat
Income from Operations	+14.8% YoY	+10%	+480bp beat
Net Store Growth (Global)	178 (30 US + 148 Int'l)	~150	Above

Segment Performance

Segment	Q2 2025	Notable
US SSS	+3.4%	Carryout + aggregator drive; positive order counts + ticket
International SSS	+2.4%	Broad-based; DPE recovering
Global Retail Sales	+5.6%	Mix of SSS + new units
Net Store Growth	+178	148 international; 30 US

Key Topics

1. Hungry for MORE Strategy Execution

The "Hungry for MORE" strategy continues to drive results across the operational excellence pillar. Carryout boost weeks + aggregator partnership + value menu execution all contributed to the US +3.4% SSS print.

2. Profit Power as Competitive Moat

DPZ's advertising budget + scale create the "profit power" advantage — ability to offer ongoing value while sustaining franchisee profitability. National pizza competitors matching value pricing pressure their franchisee economics without matching DPZ's marketing scale.

3. International Store Growth Continuing

148 net international store openings in Q2 — broad-based across major master franchisees. DPE recovering. Multi-year store growth tailwind intact.

4. Operating Leverage on Franchise Model

IFO +14.8% on sub-5% revenue growth = operating leverage of franchise model. Royalty fees + supply chain margins compounding on store base + SSS growth.

Market Reaction

Stock close July 18: ~$465. YTD CY25 ~-1%.
July 21 session: Closed approximately $470 — +1%. Volume ~1.5M (~1.2x avg).
Modest reaction reflecting full valuation; defensive QSR sentiment.

Thesis Scorecard

Thesis Point	Status
Franchise model + profit power	Confirmed
International unit growth	Confirmed (148 Q2)
Hungry for MORE strategy	Executing
Full valuation	Open (~28x P/E)
QSR pizza competition	Open

Action: Initiating at Hold. Fair value range $440-490. Post-print $470 within range.

Independence Disclosure As of the publication date, the author holds no position in DPZ and has no plans to initiate any position in DPZ within the next 72 hours. Aardvark Labs Capital Research maintains a firm-wide policy of not trading any security we cover. No compensation has been received from Domino's Pizza, Inc. or any affiliated party for this research.

Independence & Conflicts

As of the publication date, the author holds no position in DPZ and has no plans to initiate any position in DPZ within the next 72 hours. Aardvark Labs Capital Research maintains a firm-wide policy of not trading any security we cover, does not accept compensation from companies we cover or any affiliated party, and does not accept payment from readers for personalized advice. Our research is independent, unpaid by any stakeholder in the securities discussed, and reflects only our analytical opinions.

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Aardvark Labs Capital Research is not a registered investment advisor under the Investment Advisers Act of 1940 or any state securities law. We publish research under the publisher's exclusion from the Investment Advisers Act (Section 202(a)(11)(D)), as clarified by Lowe v. SEC (1985). We provide no personalized investment advice and offer no advisory services to individuals.

Data Sources & Forward-Looking Statements

Information used in this research is sourced from SEC filings, company investor relations materials, third-party financial data providers, and other publicly available sources. While we strive for accuracy, we make no warranty as to the completeness or correctness of any data presented. Any forward-looking statements, price targets, or rating opinions reflect the author's views at the time of publication and are subject to change without notice. Actual results may differ materially from projections.

Rating Framework

Aardvark Labs uses a three-tier rating system based on expected 12-month total return relative to the S&P 500:

Outperform — We expect the stock to beat the S&P 500 over the next 12 months. This reflects a favorable risk/reward based on valuation, fundamentals, and catalysts.
Hold — We expect the stock to perform roughly in line with the S&P 500. The business may be sound, but valuation or near-term uncertainty limits the upside.
Underperform — We expect the stock to trail the S&P 500 over the next 12 months. Downside risks outweigh the potential reward at current prices.

Ratings reflect post-earnings risk/reward assessments. A strong beat can still be a Hold if valuation is full; a weak quarter can be an Outperform if the sell-off is overdone.

About the Author

A.N. Burrows is the principal researcher at Aardvark Labs Capital Research. He covers the businesses most analysts overlook — quality compounders, capital-allocation stories, and businesses too small or too dull for sell-side coverage.