Dunkin' Brands Group, Inc. DNKN operates through its Dunkin’ Donuts and Baskin-Robbins brands that serve 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. 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.
Further, Keurig Green Mountain, Inc.’s partnership with Dunkin' Brands and coffee distributor The J. M. Smucker Company to make Dunkin’ K-Cup pods available for sale at retail outlets nationwide, as well as online, would aid Dunkin Brands’ top line in the to-be-reported quarter and beyond.
Investors should note the recent earnings estimate revisions for DNKN, as the consensus estimate has been almost moving downwards. However, DNKN has a decent history in earnings season. Dunkin Brands has delivered positive earnings surprise in three of the four quarters, while it has reported a negative earnings surprise in the other quarter, making for an average positive surprise of 4.35%. Meanwhile, the company has posted positive revenue surprises 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 51 cents per share, and the company reported EPS of 52 cents. Investors should note that these figures take out stock option expenses.
Revenues: DNKN reported revenues of $209.8 million. This beat our consensus estimate of $204 million.
Key Stats to Note: System-wide sales increased 2.8%, comparing unfavorably with the year ago increase of 5.7%. Adjusted operating income margin was 50.5%, down 110 basis points year over year.
Dunkin’ Donuts U.S. comps increased only 1.1%, while international comps posted a 0.8% rise. Baskin-Robbins’ U.S. comps increased 7.5%, while the international segment posted a 2.4% decline.
The company continues to expect revenue growth of between 6% and 8%; adjusted operating income growth of between 7% and 8%; and adjusted earnings per share in the range of $1.87 to $1.91.
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