Why Domino's Pizza Stock Dropped Today

Shares of pizza company Domino's Pizza (NASDAQ: DPZ) dropped on Monday morning after the company reported its completed financial results for 2024. As of 10:15 a.m. ET, Domino's Pizza stock was down a disheartening 6% and it now finds itself down nearly 20% from its 52-week high.

Domino's is facing spending headwinds

With its fourth-quarter financial results, Domino's Pizza officially grew its same-store sales for a 31st consecutive year, which is a remarkable achievement. It keeps finding ways to get incremental sales at existing locations in both domestic and international markets. And it opened nearly 800 net new locations in 2024, which helped boost revenue as well.

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Be that as it may, Domino's Pizza's top-line numbers came in a little below investors' expectations. Moreover, its bottom-line figures came in a little light as well even though they were positive. For example, the company's full-year operating income jumped about 7% to $879 million. And its free cash flow was up nearly 6% to $512 million.

On the earnings call, management pointed to challenges in consumer spending and said it would be focusing more on market share gains in 2025. In other words, the company seems to be asking investors to focus not on its numbers, but rather on its results relative to its competitors. This might suggest low growth on tap for 2025 and likely contributed to the stock's drop today.

Not a time for shareholders to panic

The concerns for Domino's Pizza's business seem to be more related to economic conditions rather than anything to worry about with the business itself. Macroeconomic conditions ebb and flow, producing headwinds from time to time. That's normal. This being the case, I don't see a compelling reason to sell Domino's Pizza stock today -- its business is strong, profitable, and can potentially keep outcompeting its rivals.

Moreover, those ongoing profits are nice considering Domino's Pizza's management rewards shareholders. In fact, it just raised its dividend by 15%, marking its 12th consecutive year of raising the payout. So the stock price is down today but shareholders still got a nice consolation prize.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino's Pizza. The Motley Fool has a disclosure policy.