Domino's Pizza had a complicated first quarter. In the U.S., the pizza giant kept growing its order count and gained market share.

However, on the company's first-quarter earnings call, CEO Russell Weiner made it clear that one franchise is weighing heavily on Domino's (DPZ) global results.

Let's dive deeper.

Why international sales missed the mark

Domino's international same-store salesfell 0.4% in Q1, compared to an increase of 3.7% in the same period a year ago. On the surface, the reversal appears to be a broad international slowdown.

The reality, according to Weiner and Chief Financial Officer Sandeep Reddy, is far more specific.

The culprit is Domino's Pizza Enterprises, or DPE, the company's largest international franchisee, which operates across Australia, Europe, Japan, and several other markets.Domino's Pizza is struggling with international salesUCG/ Getty Images

DPE has been struggling for years to get its value equation right and restart order count growth.

"If you took out DPE, the rest of our international business performed exactly as we had hoped it would for the quarter," Weiner said on the call.

That's a blunt assessment. And it puts a sharper lens on what's a bifurcated international story: a DPE problem atop an otherwise healthy global business.

The European segment, led by the U.K., was a bright spot. So was the Americas' international business.

Strip DPE from the equation, and Domino's international arm hits its targets.

DPE has been a drag on Domino’s

The DPE franchise has been a headwind for Domino's international results for roughly three years.

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Its issues are operational: value offerings haven't landed well with consumers, and the business hasn't been able to drive the order-count growth that fuels same-store sales.

A new CEO, Andrew Gregory, is set to start at DPE in August. Weiner said he remains in close contact with Jack Cowin, DPE's executive chairman, and that the two spoke as recently as the week of the earnings call.

Weiner explained:

"We've got contractual powers that we can leverage as well to drive change, and we're going to be doing all of those things."

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The long-term opportunity in DPE's markets, Australia, Japan, and parts of Europe, is simply too big to walk away from, Weiner argued.

Domino's operates more than 22,300 stores across more than 90 countries. It generated over $20.4 billion in global retail sales in the trailing four quarters ended March 22, 2026. International stores drove $2.44 billion in retail sales in Q1, up from $2.22 billion a year ago.

Story Continues

The growth is real, and DPE's drag is just obscuring it.

What the updated outlook signals for DPZ stock

Domino's revised its full-year 2026 international same-store sales guidance to low single-digit growth, down from the prior outlook.

Reddy cited macro and geopolitical uncertainty as key factors behind the cut.

The company also trimmed its U.S. same-store sales guidance to positive low-single digits after a tougher-than-expected Q1, in which overall U.S. comps grew just 0.9%. Consumer sentiment hit levels not seen since Covid, Weiner noted, and competition from rival pizza chains intensified in March. However, income from operations rose 7.9% in Q1, excluding foreign currency effects and a one-time gain from the sale of a corporate aircraft. The company added180 net new stores globally and repurchased over $169 million in stock through April 21.

Weiner's long-term view hasn't changed. He pointed to 11 consecutive years of U.S. market share gains, more than 2,000 net-new stores over that stretch, and average franchisee profits up by nearly $80,000 per store as proof that the Domino's model works.

But right now, one big international franchise is making that story harder to tell. And the CEO is done pretending otherwise.

Is DPZ stock undervalued?

Down 42% from all-time highs, Domino’s is valued at a market cap of $11 billion. Analysts tracking the restaurant stock forecastadjusted earnings per share to expand from $17.57 per share in 2025 to $28.87 per share in 2030.

If DPZ stock is priced at 16x forward earnings, which is below the 10-year average of 29x, it could gain 32% within the next four years. If we adjust for dividends, cumulative returns could be closer to 45%.

Out of the 22 analysts covering Domino’s stock, 13 recommend “Buy”, eight recommend “Hold,” and one recommends “Sell”. The average DPZ stock price target is $419, which is 26% above current levels.

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This story was originally published by TheStreet on May 8, 2026, where it first appeared in the Restaurants section. Add TheStreet as a Preferred Source by clicking here.

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