Domino's Pizza, Inc. (DPZ Quick QuoteDPZ - Free Report) reported first-quarter fiscal 2026 results, with earnings missing the Zacks Consensus Estimate and decreasing on a year-over-year basis. However, total revenues also missed the same but increased from the prior year's reported figure. Following the announcement, the company’s shares declined 5% in the pre-market trading session.

Domino’s first-quarter results were underpinned by higher supply chain revenues and increased global franchise royalties and advertising revenues. Management noted that supply chain gains reflected higher food basket pricing and increased order volumes, partially offset by an unfavorable product mix.

However, underlying trends were mixed. International same-store sales declined, indicating softness in key overseas markets. Additionally, revenue growth was partly price-driven rather than purely volume-led, while product mix remained a drag. On the profitability side, margins were pressured by unfavorable swings in investment-related gains and losses, and free cash flow also decreased, reflecting working capital headwinds.

DPZ's Q1 Earnings & Revenue Discussion

In the quarter under discussion, Domino's reported adjusted earnings per share (EPS) of $4.13, missing the Zacks Consensus Estimate of $4.29 by 3.7%. The bottom line declined 4.6% from $4.33 in the year-ago quarter.

Domino's Pizza Inc Price, Consensus and EPS Surprise

Domino's Pizza Inc price-consensus-eps-surprise-chart | Domino's Pizza Inc Quote

Quarterly revenues were $1.15 billion, up 3.5% year over year, but fell short of the $1.17 billion consensus estimate by 1.4%. Results reflected higher supply chain and franchise-related revenues, while international demand trends remained choppy.

Domino’s Traffic Metrics Show Mixed Geographic Momentum

On the demand side, global retail sales (excluding foreign currency impact) increased 3.4% year over year, with U.S. retail sales up 2.8% and international retail sales (excluding foreign currency impact) up 4%. These retail sales are a key systemwide gauge because royalties and certain fees are tied to franchisee sales rather than being recorded as company revenues.

Same-store sales trends were uneven. U.S. same-store sales (including company-owned and franchise stores) increased 0.9%, supported by higher average ticket and higher customer transaction counts. We estimated the metric to decrease 0.5% year over year.

At domestic company-owned stores, Domino’s comps increased 1.5% compared with the 2.9% decline reported a year ago. We estimated the metric to decrease 2.9% year over year.

Domestic franchise store comps rose 0.8% compared with a 0.4% decrease reported in the prior-year quarter. We estimated the metric to decrease 0.4% year over year.

While international same-store sales (excluding foreign currency impact) declined 0.4%, we estimated the metric to increase 1.9% year over year. Store expansion remained a notable contributor, as the system delivered global net store growth of 180 in the quarter, including 19 net openings in the United States and 161 internationally.

DPZ’s Operating Profit Improves Despite Store Cost Pressure

In the fiscal first quarter, profitability within segments was mixed. Domino’s gross margin expanded 60 basis points (bps) year over year to 40.4%. Supply chain gross margin expanded 60 basis points to 12.2%, aided by procurement productivity, partially offset by a higher cost of the company’s food basket.

Income from operations increased 9.6% to $230.4 million. Excluding the $3.6 million positive impact of foreign currency exchange rates on international franchise royalty revenues, operating income still rose 7.9%, reflecting operating leverage and a favorable mix toward franchise-related revenues, which carry no cost of sales.

DPZ’s Cash Flow and Capital Returns Stay Shareholder-Focused

DPZ ended the quarter with $232.9 million in cash and cash equivalents, compared with $125.7 million as of Dec. 28, 2025. Long-term debt (less current portion) at the end of the fiscal first quarter totaled $4.88 billion compared with $4.81 billion reported in the previous quarter, and the leverage ratio improved to 4.3x from 4.9x a year ago. Inventory amounted to $69.2 million compared with $79.2 million as of Dec. 28, 2025.

Shareholder returns remained active: the company repurchased 188,304 shares for $75.1 million during the quarter, and on April 21, 2026, the board authorized an additional $1 billion share repurchase program, bringing total authorization for future repurchases to $1.29 billion. Management also declared a $1.99 per share quarterly dividend payable June 30, 2026.

Net cash provided by operating activities was $162 million versus $179.1 million in the prior-year quarter. Capital expenditures were $15 million, resulting in free cash flow of $147 million, down from $164.4 million a year ago.

DPZ’s Zacks Rank & Key Picks

Domino's currently carries a Zacks Rank #3 (Hold).

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The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 11.9% and 26.3%, respectively, from the prior-year levels.

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The Zacks Consensus Estimate for Five Below’s 2026 sales and EPS indicates growth of 11.3% and 20.2%, respectively, from the year-ago period’s levels.

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