With Competition Percolating, Dunkin' Brands Looks Like A Bad Bet At Current Prices
- Quick serve restaurant operator Dunkin' Brands has continued to post profit growth in FY2014, thanks in part to its ability to expand its operating margin.
- However, the company's comparable store sales growth has downshifted relative to the prior-year period, a trend that seems to have led the market to question Dunkin's Brands growth trajectory.
- With a forward P/E multiple of roughly 24, Dunkin' Brands seems to be richly priced for its profit growth prospects and investors should probably avoid the story at current prices.
Update: Dunkin' Donuts Grows Units Faster Than Sales
- DNKN announced its 2014 restaurant growth.
- The news makes me somewhat less bearish on DNKN.
- The news isn't much of a surprise, but the magnitude is bigger than it appears.
Update: Dunkin' Donuts Is Going To China - Okay, NOW We're Talking
- DNKN plans to build more than 1,400 locations in China.
- The news calmed down my bearish stance against DNKN.
- I didn’t see this coming at least not this soon.
- DNKN announced development with Sizzling Platter LLC to expand into Mexico.
- Just like expansion into California, it’s too-little-too-slow and makes no difference in my opinion of DNKN.
- The news is very similar to the slow California expansion.
After A Tough 2014, Will Dunkin' Brands Be Able To Bounce Back?
- Renowned franchiser of Quick Service Restaurants (QSR’s) Dunkin Brands Group Inc. has had a relatively tough year.
- Diluted earnings per share during the quarter amounted to $0.52 as compared to $0.37 per share in the year ago quarter.
- Dunkin' Brands has been hurt by commodity price inflation and intense competition, particularly from rival fast food restaurant chains.
- Dunkin' Brands has aimed to further expand its global footprint towards markets with favorable commodity price trends, as it hopes to generate revenue increases in the coming year.
- Currently, the company only represents a worthwhile investment prospect for dividend investors, capital gain seeking investors will be better off by avoiding investment in Dunkin' Brands’ stock.
After A Woeful 2014, Dunkin' Brands Can Still Deliver Long-Term Gains
- Dunkin' Brands has been under pressure this year due to stiff competition from different companies.
- Dunkin', however, is looking to make a comeback by opening stores in key locations and improving the menu to attract more customers.
- Dunkin's focus on technology and customer service should help it improve customer retention, and improve financial performance.
Dunkin Brands - Little Appeal As Growth Is Anticipated To Slow Down In 2015
- Dunkin Brands warns for slower growth in 2015.
- Investors sell their shares after a disappointing year, as expectations for growth continue to be on the high side.
- Long term potential for growth remains, as the premium valuation and high leverage employed limits my enthusiasm, even after the latest sell-off.
Update: Dunkin' Donuts Latest Outlook Raises An Eyebrow Even Higher
- DNKN drops another cup of scalding hot coffee on the laps of shareholders with a bad outlook.
- DNKN has done this several times before with excuses that don’t pass the smell test.
- Even after the share price drop, DNKN looks overvalued considering the risk of further disappointment and its valuation vs. its restaurant industry peers.
Shares Of Dunkin' May Not Be As Cheap As You Think
- Shares of Dunkin' fell hard on Dec. 18, closing near their 52-week low on news that the 2015 fiscal year may not be as great as previously anticipated.
- In spite of this blip on the radar, the company has done well in growing sales and profits in recent years.
- This presents a bullish case for business but, with shares trading at pretty high levels, investors should be cautious moving forward.
Investing In Dunkin' Donuts For California? Fuhgettaboutit!
- DNKN’s domestic growth is mediocre.
- DNKN’s international stores are declining.
- DNKN’s West Coast expansion is so far very, very slow.
- Starbucks released Q4 earnings on October 30.
- Dunkin' Brands released Q3 earnings on October 23.
- Both stocks reacted by moving to the downside.
- Which company had the better quarter?
I'm Thinking About Removing Dunkin' Brands From My Portfolio Now
- The stock appears to be fairly valued on 2015 earnings estimates and earnings growth potential.
- The dividend is pretty small and doesn't have much room to grow.
- I started out thinking of adding this stock to my IRA but after doing the analysis I think I want to remove it from the dividend portfolio.
Update: Dunkin' Donuts Earnings Show It's Feeling Pain From Competition
- DNKN reported fiscal third quarter results citing breaking competition for its disappointment.
- I’m still overall bullish on DNKN due to its geographic opportunity.
- I knew something was up beyond weather and the economy last quarter.
Update: Dunkin' Brands - The Headwinds Are Now Evident
- Dunkin' Donuts reported better than expected EPS but missed on the top line.
- This revenue miss coupled with tempered guidance from management has cemented my bearish outlook.
- I previously discussed how Dunkin' Donuts would face headwinds due to market saturation and mounting competition.
Dunkin' Brands: Mixed Q3 Results Have Sent Shares Sharply Lower; Should You Buy?
- Q3 earnings were released on October 23.
- The results were mixed compared to expectations.
- The stock has responded by moving sharply lower.
Will Dunkin' Brands Turn It Around And Report Strong Q3 Earnings Results?
- Dunkin' reported mixed Q2 results in July.
- Q3 earnings will be released on October 23.
- Analysts currently anticipate substantial growth.
- The stock currently yields about 2.05%.
Dunkin' Brands Isn't Just An International Growth Story, It's A California Growth Story Too
- Dunkin' Brands is just now tapping into the California market.
- International expansion into the 2nd most populous country, India, began two years ago.
- Dunkin' Brands sees potential for 30,000+ store openings worldwide in the long-term.
Investing In Dunkin' Brands: Weighing The Pros Against The Cons
- Dunkin' Brands is adopting strategies such as limited time offers and improving customer engagement to overcome the challenges that it is facing.
- But Dunkin' operates in a difficult environment and rising input costs are a concern.
- Dunkin' is expensive from a valuation viewpoint.
- Down 9.67% YTD shares in DNKN are looking very cheap.
- The company is trading at very high p/e and p/s ratio, but I believe this can be justified by strong growth expectations.
- The long term debt isn't growing despite a quickly growing number of stores.
Dunkin' Brands Group, Inc. - Analyst/Investor DayMay. 7, 2013
Yesterday, 4:33 PM
- The new $2.6B securitized debt facility replaces the previous one of $1.9B, and fixes the weighted average interest rate at 3.765% for the next few years.
- Net proceeds to the company will be about $615M, much of which will be returned to shareholders as the company launches a new $700M buyback program.
- Adjusted EPS guidance is lowered to $1.83-$1.87 from $1.88-$1.91 previously.
- Source: Press Release
- DNKN unchanged after hours
Fri, Jan. 23, 12:41 PM
- Companies selling coffee perked up their ears after Starbucks said it saw strong single-serve and packaged coffee sales during its most recent quarter and took market share.
- Grocery store analysts have noted the aggressive positioning of Starbucks products in many chains over the last six months.
- SBUX FQ1 report, SBUX earnings call.
- On watch: Keurig Green Mountain (NASDAQ:GMCR), Dunkin' Brands (NASDAQ:DNKN), Kraft Foods (NASDAQ:KRFT), J.M. Smucker (NYSE:SJM), TreeHouse Foods (NYSE:THS).
Sat, Jan. 17, 12:45 PM
- Milk prices are in a downward trend with an excess of supply on the international market.
- The supply is so far beyond expectations that some U.S. cooperatives have directed farms to pour out part of their inventory.
- A reduced level of milk imports from China and Russia has been a factor in the market.
- Food companies are seeing a quicker benefit from the milk price decline than consumers, although analysts anticipate lower prices at grocery and C-stores stores in 2015.
- Milk price data (consumers) vs. milk futures chart
- Related stocks: DF, WWAV, SJM, DF, OTCPK:NSRGY, LWAY, DNKN, MCD, SBUX, GIS, HSY, MJN, QSR, KO, GIS,
- Related ETFs: MOO.
Mon, Jan. 12, 10:53 AM| 2 Comments
Fri, Jan. 9, 8:35 AM
- The House passed a bill to redefine a full-time worker under the Affordable Care Act to 40 hours a week from 30 hours.
- The legislation could impact millions of workers as companies adjust hours and employee policies around the issue.
- The measure was passed by a vote total of 252-172.
- Senate Majority Leader Mitch McConnell has indicated the bill will see a vote in his chamber.
- The White House has threatened to veto the bill on its view it will reduce the number of workers covered by healthcare.
- Most industry groups within the restaurant and food industry have issued support for the legislation.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, BDL, NATH, LUB, QSR, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, CASY, IMKTA, SFS, KR, WMK, SVU, WFM, SWY, VLGEA, TFM,NGVC, BIG, ZU, TUES, WMT, PSMT, COST, TGT, DLTR, BURL, FDO, DG, FRED, WBA, RAD, CVS, HABT, NDLS, PBPB.
Thu, Jan. 8, 1:38 PM
- The National Retail Federation is urging Congress to pass H.R. 30 to restore the traditional 40-hour work week standard for healthcare benefits.
- Healthcare benefits as defined under the Affordable Care Act are applied at the 30-hour level.
- CBO estimates on the impact of H.R. 30 (.pdf)
- Related stocks: MCD, QSR, WEN, JACK, DNKN, SONC.
Thu, Jan. 8, 11:42 AM
- Dunkin' Brands (DNKN +1.3%) plans to open 1.4K Dunkin' Donuts restaurants in China over the next two decades in an aggressive expansion strategy.
- The chain currently has about 16 outlets operating in the region.
- The first new restaurant is expected to be opened during Q4.
- What to watch: The China path has been far from smooth for U.S. fast-food chains KFC and McDonald's, although Dunkin' Donuts' relies less on meat suppliers which could work in its favor.
- Also on Dunkin' Donuts global expansion: Dunkin' Donuts rolls into Mexico (Jan. 05 2015)
Mon, Jan. 5, 11:08 AM
Dec. 31, 2014, 11:33 AM
- Consumer spending: More consumers say they are willing to trade-up to a traditional dining spot from fast-casual than trade-down to a fast-food option, according to Technomic. The revelation takes some of the steam away from the argument that lower gas prices will boost traffic at major fast-food chains.
- IPOs: Profitable 2014 launches by Zoes Kitchen (ZOES -0.2%) and Habit Burger (HABT -0.5%) could inspire other private chains to go public. Shake Stack (Pending:SHAK) got an early jump by filing this week for an IPO.
- Labor costs: Analysts see a risk to profitability in the sector from the wave of minimum wage laws set to go into effect over the next year. Some analysts think President Obama will push for federal legislation with the issue hard for election-minded Republicans to oppose strongly.
- Fast-casual pizza: A breakout of a fast-casual pizza concept is widely expected in 2015 (candidates).
- Chipotle: Another +30% run for the Mexican chain off of sizzling comps leaves it with limited upside, according to some analysts. Chipotle (CMG +0.8%) execs don't agree, noting during the Q3 earnings call (transcript) that enormous upside exists to maximize peak transactions per hour (350-400). Beef, cheese, and avocado pricing will be key for CMG next year as well.
- Restaurant stocks: CAKE, CBRL, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, BDL, NATH, LUB, QSR, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
Dec. 24, 2014, 9:57 AM
- The restaurant industry will run up against soft comps in January and February due to last year's winter storms which were much worse than normal.
- Restaurant same-store sales will rise just over 2% for the full year, according to an estimate from the co-founder of the NRN-MillerPulse tracking survey.
- Technomic sees a 3% growth in restaurant comps in 2015, while Fitch Ratings has an outlook for 2% to 3%.
- On the cost side, commodity prices for chicken, cheese, wheat, and pork are all expected to moderate. However, beef prices are seen increasing 4% to 8%.
- Minimum wage increases in many state kick in on January 1 which could impact the bottom line for many chains.
- Fresh IPOs, concept acquisitions, and leveraged buyouts care expected to be major themes in 2015, according to analysts.
- CEOs on the hot seat include Don Thompson at McDonald's (NYSE:MCD) and Nigel Travis at Dunkin' Brands (NASDAQ:DNKN).
- Restaurant stocks: CAKE, CBRL, CMG, DPZ, DRI, EAT, JACK, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, HABT, NDLS, PLKI, LOCO, YUM, KKD, BOBE, TAST, GTIM, FRSH, COSI, FRS, PBPB, FRGI, QSR.
Dec. 18, 2014, 9:29 AM| 1 Comment
Dec. 18, 2014, 9:14 AM| 9 Comments
Dec. 18, 2014, 7:08 AM
- Dunkin' Brands (NASDAQ:DNKN) announces financial targets for 2015.
- Guidance from the restaurant operator includes revenue growth of 5% to 7% and operating income growth of 6% to 8%.
- Comparable-store sales are expected to rise 1% to 3% at both the Dunkin' Donuts and the Baskin-Robbins chains.
- The company sees adding 410 to 440 Dunkin' Donuts U.S. stores and 5 to 10 Baskin-Robbins outlets. The international store count is forecast to increase by 200 to 300 units.
- 2015 EPS is pegged at $1.88-$1.91 vs. $2.02 consensus.
Dec. 1, 2014, 3:30 PM
- The National Restaurant Association's Restaurant Performance Index gained 1.8% M/M in October to 102.8.
- The poll of restaurant operators indicated 55% saw improved traffic trends in October.
- Once again, food commodity expenses and rising labor costs are viewed as potential drags.
- The positive read on the sector came before the November slide of gas prices which is viewed as a potential driver for restaurant traffic and spending.
- Restaurants stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
Nov. 29, 2014, 10:29 AM
- Analysts with Gasbuddy.com predict some gas stations in the U.S. will offer $2 per gallon gas by Christmas.
- The last time the average price of gas in the U.S. was below $2 was in March of 2009.
- Forecasts from economists vary widely on the overall gas benefit to consumers for Q4. The high end from the group is an outlook of $300 per household, while the low end is closer to $100.
- Most analysts see an immediate lift for retail chains with large distribution channels. Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Costco (NASDAQ:COST), Dollar General (NYSE:DG), Family Dollar (NYSE:FDO), Dollar Tree (NASDAQ:DLTR), Big Lots (NYSE:BIG), and Five Below (NASDAQ:FIVE) come to mind.
- Airline stocks (JBLU, DAL, UAL, LUV, AAL, RJET, ALK, HA, ALGT, VA) have already ripped strong gains off the OPEC news, although some see even more long-term upside as forward fuel hedges get reworked.
- A sustained period of low gas prices should lift restaurant stocks (CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN) say some analysts.
- The gaming sector is (CZR, PNK, BYD, ISLE, CNTY, MCRI, MGM, NYNY) also an off-the-radar pick to bounce.
Nov. 25, 2014, 1:12 PM
DNKN vs. ETF Alternatives
Dunkin Brands Group Inc is a franchisor of quick service restaurants serving hot and cold coffee and baked goods, as well as hard serve ice cream. The Company franchise restaurants under its Dunkin' Donuts and Baskin-Robbins brands.
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