US SSS +0.9% Major Miss vs +2.72% Street and 3% Internal Target, International -0.4%, FY26 Guide LOWERED, Stock 3-Year Low at $329 (-10.5%) — Maintaining Hold
Key Takeaways
- Q1 2026 US SSS +0.9% — major miss vs Street +2.72% (-180bp) and against management's own internal target of 3%. International SSS -0.4% ex-FX — first negative international quarter in years. Revenue $1,150.6M (+3.5% YoY).
- EPS $4.13 (-4.6% YoY) vs Street $4.33 — impacted by $30M unfavorable mark-to-market on an investment. IFO +9.6% (+7.9% ex-FX) — operating leverage intact despite revenue softness.
- FY26 guidance LOWERED: US SSS to "low single digits" (from "positive low single digits"); international SSS to low single digits; operating income to mid-to-high single digits. Russell Weiner committed to delivering 3% US SSS for FY26 (back-end loaded).
- NEW $1B share repurchase authorization announced ($1.29B total remaining). YTD FY26 repurchases $170M (446K shares). Capital return discipline + dividend (raised 15% in Feb) continue.
- Rating: Maintaining Hold. Q1 miss + FY26 guide cut materially negative but stock has already corrected -30% from Q3 2025 peak. Fair value range $325-385 reflects lowered FY26 EPS. Post-print $329 at 3-year low — limited downside but limited upside until comp inflection visible.
Results vs. Consensus
| Metric | Q1 2026 Actual | Street | Beat/Miss |
|---|---|---|---|
| US Same-Store Sales | +0.9% | +2.72% | -180bp MISS |
| International SSS (ex-FX) | -0.4% | +1.0% | -140bp MISS |
| Global Retail Sales (ex-FX) | +3.4% | +5.0% | -160bp MISS |
| Revenue | $1,150.6M (+3.5% YoY) | ~$1,180M | -$30M / -2.5% |
| Diluted EPS | $4.13 (-4.6% YoY) | $4.33 | -$0.20 / -5% |
| Income from Operations (ex-FX) | +7.9% YoY | +9% | slight miss |
| Net Store Growth (Q1) | 180 globally (19 US + 161 Int'l) | ~170 | Above |
FY2026 Guidance Update — LOWERED
| Metric | Prior FY26 Guide | NEW FY26 Guide |
|---|---|---|
| US SSS | "positive low single digits" | low single digits (LOWERED) |
| International SSS | n/a (low single digits implied) | low single digits |
| Operating Income Growth | n/a | mid-to-high single digits |
| US Net Store Growth | 175+ | 175+ (maintained) |
| International Net Store Growth | ~800 | ~800 (maintained) |
Key Topics
1. US SSS +0.9% — Worst Comp in Cycle
Q1 US SSS +0.9% is the worst US comp in the post-pandemic cycle. Management openly acknowledged the miss vs internal 3% target. Drivers per CEO Russell Weiner: (a) consumer sentiment hit COVID-level lows, particularly in March; (b) ongoing inflation impacting purchase decisions; (c) weather affected carryout boost weeks; (d) QSR pizza competition increased — national pizza players offering value comparable to Domino's.
"Performance for the rest of the quarter did not meet our expectations, resulting in same-store sales of 0.9%. We are very clear on the drivers of our results, and we'll do everything within our control to address them by adjusting our plans in the second half of the year."
— Russell Weiner, CEO
2. International SSS -0.4% — First Negative Quarter
International SSS -0.4% ex-FX represents the first negative international quarter in years. DPE (Domino's Pizza Enterprises) was a meaningful drag — excluding DPE, international would have met expectations.
3. FY26 Guidance Lowered
FY26 US SSS guide lowered from "positive low single digits" to "low single digits." International SSS guide low single digits. Operating income growth to mid-to-high single digits. Maintains commitment to deliver 3% US SSS for full year (implies back-end loaded recovery).
4. Profit Power Defense Against Competition
Russell Weiner emphasized DPZ's "profit power" advantage — advertising budget + scale create franchisee profitability that competitors matching value pricing cannot replicate. ~450 competitor pizza store closures announced for 2026.
"When competitors match our value, it places significant pressure on their franchisee economics. Over time, we expect this pressure to contribute to more store closures on top of the roughly 450 closures our 2 public pizza competitors have already announced for 2026."
— Russell Weiner, CEO
5. NEW $1B Share Repurchase Authorization
Board approved additional $1B share repurchase authorization in April. Total remaining authorization $1.29B as of April 21. YTD FY26 repurchases $170M (446K shares). Signals confidence in long-term FCF.
6. Product Innovation Q3-Q4 Pipeline
Russell Weiner: "I'm especially energized by the product innovation we're bringing in the second half of the year, particularly around pizza, which goes beyond what we originally planned. It's bold, exciting and has real potential to elevate our brand."
7. Long-Term Track Record
Russell Weiner highlighted 11 points of US market share gained over 11 years. 2,000+ net new stores over the period. Average franchisee profits +$80K per store ($740M total system profit increase over 11 years).
Market Reaction
- Stock close April 24: ~$370. YTD CY26 -18%; trailing 12M -20%.
- April 27 session: Closed approximately $329 — -10.5% (-$41). Stock hit 3-year low + 52-week low. Volume ~3M (~2x avg).
- Major sell-off reflected US SSS major miss + FY26 guide cut.
Thesis Scorecard
| Thesis Point | Status |
|---|---|
| Hungry for MORE strategy | CHALLENGED (US +0.9% Q1) |
| US comp recovery | FAILED (decel Q3 +5.2% → Q4 +3.7% → Q1 +0.9%) |
| International SSS | NEGATIVE (-0.4%) |
| FY26 guidance | LOWERED |
| Profit power moat | Confirmed (competitor closures) |
| Capital return discipline | Strengthened ($1B buyback) |
| Long-term track record | Intact (11 pts share over 11 yrs) |
Action: Maintaining Hold. Fair value range lowered to $325-385 on FY26 EPS guide cut. Post-print $329 at 3-year low. Limited downside but limited upside until comp inflection visible. Key catalysts: Q2-Q3 product innovation pipeline, US SSS recovery.