Pizza purveyor Domino's (NYSE:DPZ) has been on a powerful growth run for so long that the market is now judging it on a scale of zero to perfect, and penalizing it for serving up a quarterly report that was slightly less than ideal. So even though revenue was up 22% and same-store sales grew nearly 5%, those numbers missed analysts' consensus expectations, and investors bid down the price of the stock Tuesday.

In this segment from MarketFoolery, host Chris Hill and Motley Fool Asset Management's Bill Barker discuss the background situation for the chain, what's underlying its sales growth, and more.

A full transcript follows the video.

This video was recorded on Oct. 16, 2018.

Chris Hill: Shares of Domino's are down about 5% this morning. Domino's seems like it has performed so well for so long as a business that now, when they come out with their quarterly report, they're in that zone of Wall Street analysts saying, "We're looking for perfection. We don't know what numbers you're about to report, but ideally, we'd like to see perfection." Domino's third quarter report was, on balance, really strong. Revenue up 22%, same-store sales up nearly 5%. And yet, both of those were lower than Wall Street analysts were looking for, and we're seeing a little bit of a sell-off.

Bill Barker: Yeah, I'd give the report like an A-. It's an awfully good report, just looking up and down everything. I guess it could be summed up by, earnings per share were up around 68%, something like that, year over year. And yet, that's not good enough. Why? Because same-store sales were up around 6% domestic. They were up 8% last year. Company-owned same-store sales were up 4.9%. I think they were expected to be above 6%. Same-store sales are not compounding at over 8%, but now 6%. International stores weren't growing as fast as that. But they're opening stores. They're buying back shares. I mean, it's a thoroughly good report. The stock can't go up every day, despite appearances.

Hill: [laughs] I suppose that's true. Certainly, there are plenty of, not just pizza companies, but restaurants that would be doing handsprings if they got same-store sales growth in the neighborhood of 5%.

Barker: Yeah. They're expanding their menu and they're getting a little bit of inflation. So, part of the growth is from just pricing. Of course, Papa John's is a mess. Domino's is doing well, I think, in part because Papa John's is not at full strength at the moment, in terms of, I don't know, competent management, or management which is not embroiled in lawsuits with previous management. That's Papa John's we're talking about. Domino's and others are getting a little bit of a tailwind from just having its main competition be as distracted as they are at the moment.

Hill: I was down at the gym in our building this morning. I was on the treadmill. ESPN was on. At various points, there were commercials for both Domino's and Papa John's. I don't know why, but when the Papa John's commercial came on, the thought that popped into my head was, "Oh, they're sticking with the name." Of course, if they were going to change the name, that would be big news, and I would have heard about it. But in the moment, I just thought, "Wow, OK!" Obviously, they're no longer featuring John himself, because he's no longer with the company, even though he remains the largest shareholder, so I thought, "Oh, they're sticking with that name. They're sticking with the branding for now."

The Domino's commercial is this one where they're repairing the roads. Have you seen this commercial?

Barker: Yeah.

Hill: Apparently, there's some epidemic in America, and the epidemic is Domino's delivery drivers hitting potholes and the pizza goes flying, and we can't have that. It's a clever ad, where a Domino's-branded truck comes in, and crew, and they fix the pothole. But, really? Is that happening a lot? Here's the thing. I'm not so interested in ordering Domino's pizza itself, but if there's a way that I could place an order to get some potholes filled in Alexandria, Virginia, I'm interested in that.

Barker: I was in Boston.

Hill: Speaking of potholes.

Barker: Speaking of potholes. I was around some neighborhoods where the roads are maintained privately. I guess this is a Massachusetts thing, some of the local governments have gotten out of the business of actually maintaining the roads, and leave it to the residents to repair their roads at whatever point they can all get together and agree to spend the money to repair it themselves.

Hill: So, me and everyone on my block pool our money and say, "Great, let's order the Domino's pothole truck?"

Barker: Or not, as my experience was. People would rather drive over really, really awful roads, or just skip driving on their own road somehow, rather than pay the money to repair them. So, there may be a business opportunity for Domino's in certain localities in Massachusetts.

Hill: It sounds like a business opportunity for O'Reilly and AutoZone and Advance Auto Parts. If cars and trucks are going to wear out more quickly there, that sounds like a move for them.

Bill Barker has no position in any of the stocks mentioned. Bill Barker is an employee of Motley Fool Asset Management, a separate, sister company of The Motley Fool, LLC. The views of Bill Barker and Motley Fool Asset Management are not the views of The Motley Fool, LLC and should not be taken as such. Chris Hill has no position in any of the stocks mentioned. The Motley Fool is short shares of PZZA. The Motley Fool has a disclosure policy.