Why the Domino's Pizza Enterprises Ltd. share price tumbled 6% today

The Domino's Pizza Enterprises Ltd. (ASX:DMP) share price has fallen 6% today. Should you snap up shares on the cheap?

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Unfortunately for its shareholders, the Domino's Pizza Enterprises Ltd. (ASX: DMP) share price has been one of the worst performers on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) today.

In early afternoon trade the pizza chain operator's shares are down almost 6% to $54.68.

What happened?

With no news out of the company and no broker notes that I'm aware of, today's decline appears likely to relate to a sharp drop in the shares of parent company Domino's Pizza in the United States following its second-quarter update.

Despite beating analysts' expectations on both the top and bottom lines during the quarter, its shares fell 8% due to weaker same-store sales from the US company's international restaurants.

Same-store sales from its international segment grew 2.6% during the quarter, due largely to it being up against a prior-year increase of 7.1% and weakness in Europe.

Should you buy the dip?

Whilst this is a bit of a disappointment, it is worth noting that in its earnings call the company's management pointed out that the Americas and Asia-Pacific regions were its strongest performers during the quarter.

This could bode well for the locally listed Domino's during earnings season, especially as its sales are predominantly generated in the Asia-Pacific region.

Furthermore, as we are well into confessions season now, I would expect that the company would have warned the market if it were due to fall short of expectations.

So all in all, I feel this panic could ultimately be nothing short of an overreaction.

In light of this I would suggest investors consider picking up Domino's shares following this recent share price weakness and make a long-term buy and hold investment.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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