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Category: Starbucks (SBUX) and Dunkin' Brands (DNKN)
Date: 27 June 2020 Stock price of Starbucks: $71.57 Stock price of Dunkin' Brands: $62.14 Battle of the baristas. In this article we compare the stock of Starbucks (SBUX) to that of Dunkin Brands (DNKN) in order to find out who comes out on top in the battle of the barista stocks and which stock is most likely to provide superior returns over the next couple of years. Grab a cup of coffee and enjoy the article.
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Taking the PE ratio and dividend yield of these two firms into account and the fact that the stock of Dunkin Brands didn't run up as far as Starbucks over the last 3 years, we believe that Dunkin Brands has the potential to provide superior long term returns to Starbucks "
More About Starbucks (SBUX)
Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 81 markets. Formed in 1985, Starbucks Corporation’s common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SBUX.” We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of high-quality food items through company-operated stores. We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, as well as grocery and foodservice through our Global Coffee Alliance with Nestlé S. A. ("Nestlé"). In addition to our flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi.
Quick facts about Starbucks (SBUX)
Revenues from our reportable operating segments as a percentage of total net revenues for fiscal 2019 were as follows:
Quick facts about Starbucks (SBUX)
- Starbucks is listed on the Nasdaq exchange under stock code ticker: SBUX
- Company operated stores: 15 834
- Licensed stores: 15 422
- Total revenues for 2019 fiscal year : $26.508 billion
- Earnings per share: $2.92
- PE ratio of Starbucks: 24.5
- Dividends: $1.49
- Dividend yield of Starbucks: 2.1%
- Beverage sales makes up 74% of Starbucks revenues
Revenues from our reportable operating segments as a percentage of total net revenues for fiscal 2019 were as follows:
- Americas (69%)
- International (23%)
- Channel Development (8%)
More About Dunkin' Brands (DNKN)
We are one of the leading franchisors of quick service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard serve ice cream. We franchise restaurants under our Dunkin' and Baskin Robbins brands. With over 21,000 points of distribution in more than 60 countries worldwide, we believe that our portfolio has strong brand awareness in our key markets.
We believe that our 100% franchised business model offers strategic and financial benefits. For example, because we do not own or operate restaurants, our Company is able to focus on menu innovation, marketing, franchisee coaching and support, and other initiatives to drive the overall success of our brands. Financially, our franchised model allows us to grow our points of distribution and brand recognition with limited capital investment by us.
Quick facts about Dunkin' Brands
We believe that our 100% franchised business model offers strategic and financial benefits. For example, because we do not own or operate restaurants, our Company is able to focus on menu innovation, marketing, franchisee coaching and support, and other initiatives to drive the overall success of our brands. Financially, our franchised model allows us to grow our points of distribution and brand recognition with limited capital investment by us.
Quick facts about Dunkin' Brands
- Total distribution points of all brands in all countries (as at end December 2019): 21 297
- Dunkin' US had 9 630 distribution points as at end of December 2019
- Dunkin' International operations has 3 507 distribution points in 40 countries
- Total revenue for 2019 fiscal year: $1.370 billion
- Earnings per share for 2019 fiscal year: $2.89
- PE ratio of Dunkin Brands: 21.6
- Dividends paid in fiscal year: $1.61
- Dividend yield of Dunkin Brands: 2.6%
- Cash and equivalents: $707.977 million
- Shares in issue: 83.674 million
Starbucks (SBUX) stock vs Dunkin' Brands (DNKN) stock
The image below shows the stock price performance of Starbucks (SBUX) and Dunkin Brands (DNKN) over the last 3 years. Both these firms are well known for their coffee and quick serve and ready to go meals and snacks. Their stock price performance over the last 5 quarters in particular are very similar. Over the last 3 years the stock of Starbucks (SBUX) has provided a return of 22.26% while the stock of Dunkin increased by 14.14% over the same period of time.
So if one had to buy one of these two barista based companies stock right now who would and should you buy? Both these entities are trading at a stockholders deficit, which is one of our main valuation metrics. Essentially what that means is these firms liabilities outstrips their assets. Looking at more common indicators such as the Price to earnings ratio (PE ratio), Starbucks (SBUX) is trading at a PE ratio of 24.5 while Dunkin Brands is trading at a much lower PE of 21.6. Dunkin Brands is also trading at a far better dividend yield of 2.6% compared to Starbucks dividend yield of 2.1%. Taking the PE ratio and dividend yield of these two firms into account and the fact that the stock of Dunkin Brands didn't run up as far as Starbucks over the last 3 years, we believe that Dunkin Brands has the potential to provide superior long term returns to Starbucks if one had to pick of these two stocks now.
So for now in the battle of the baristas we rate Dunkin' Brands as the winner
So for now in the battle of the baristas we rate Dunkin' Brands as the winner