Dunkin' Brands Group, Inc. (DNKN) operates through its Dunkin’ Donuts and Baskin-Robbins brands that serve serving hot and cold coffee and baked goods, as well as hard-serve ice cream.
In the past few quarters, Baskin Robbins performed well. However, comps at Dunkin’ Donuts outlets in the U.S. were sluggish due to tough competition in the breakfast segment and sluggish macroeconomic conditions. Also, the company is not performing as expected in its international markets, mainly due to a slowdown in South Korea and Japan. However, the introduction of more drive-through locations, menu innovation coupled with breakfast-menu optimization will help the company to offset the negatives to some extent.
Investors should note the recent earnings estimate revisions for DNKN, as the consensus estimate movement has been a mixed bag. In fact, DNKN has a mixed history in earnings season. Dunkin Brands has delivered in line earnings results in one of the last four quarters, positive earnings surprise in one of the quarters while negative earnings surprise in the other two, making for an average negative surprise of 0.90%. Meanwhile, the company has posted negative revenue surprise in three of the trailing four quarters.
Currently, DNKN has a Zacks Rank #3 (Hold), but that could change following Dunkin Brands’ earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: DNKN beat on earnings. Our consensus earnings estimate called for earnings of 36 cents per share, and the company reported EPS of 40 cents. Investors should note that these figures take out stock option expenses.
Revenues: DNKN reported revenues of $185.9 million. This beat our consensus estimate of $182.0 million.
Key Stats to Note: System-wide comps increased 6.2%, better than the year ago increase of 4.3%. Adjusted operating income margin was 47.1%, up 310 basis points year over year.
The company increased its earnings, revenue and operating income guidance for 2015. The guidance takes into account the financial impact of agreement with The J.M. Smucker Company and Keurig Green Mountain Inc. to make Dunkin' K-Cup packs available at additional retail outlets nationwide.
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