Domino's Pizza, Inc. (DPZ) shares fell around 10% on Thursday after the company reported worse-than-expected fourth quarter financial results. Revenue rose 21.1% to $1.08 billion but missed consensus estimates by $10 million, and non-GAAP earnings per share came in at $2.62 but missed consensus estimates by seven cents per share. Comparable sales were also well below the 7.2% consensus at 5.6%.

While domestic comparable sales missed expectations, Stephens Inc. analyst Will Slabaugh believes that the comparable sales still show strong momentum in the company's business. The analyst maintained his Overweight rating and believes that the pizza company can sustain domestic same-store sales growth at the high end of the company’s guidance of 3% to 6% over the next three to five years.

Popular pizza chains – including Domino's, Papa John's International, Inc. (PZZA) and Pizza Hut, under parent YUM! Brands, Inc. (YUM) – could face near-term competition as Blaze Pizza positions itself for an initial public offering. In addition to having LeBron James as an investor and occasional spokesperson, the new pizza chain is adding to-go and delivery services across the United States.

Chart showing the performance of Domino's Pizza, Inc. (DPZ) stock
StockCharts.com

From a technical standpoint, Domino's stock broke down from trendline and 50-day moving average support levels at $261.73 to S1 support at $253.14. The relative strength index (RSI) moved toward oversold territory with a reading of 34.26, but the moving average convergence divergence (MACD) accelerated its downtrend. These indicators suggest that the stock could see some near-term consolidation, but the intermediate-term trend remains bearish.

Traders should watch for some consolidation above S1 support at $253.14 before a possible breakdown to retest reaction lows at around $235.00 in the intermediate term. If the stock remains above S1 support, traders should watch for a move back in to its prior price channel above $261.73, although strong resistance lies near the pivot point and 200-day moving average at around $270.00, which could limit upside.

The author holds no position in the stock(s) mentioned except through passively managed index funds.