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Category: Stock Market and Dunkin' Brands
Date: 1 November 2019 Stock Price: $78.62 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Dunkin' Brands, the owner of Dunkin' donuts and Baskin-Robbins.
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About Dunkin' Brands
With more than 21,000 points of distribution in more than 60 countries, Dunkin’ Brands is one of the world’s leading franchisors of quick service restaurants (QSRs) serving hot and cold coffee and baked goods, as well as hard serve ice cream. Dunkin’ Brands is the parent company of two of the world’s most recognized and beloved brands: Dunkin’, America’s favorite all-day, everyday stop for coffee and baked goods, and Baskin-Robbins, the world’s largest chain of ice cream specialty shops.
Dunkin’, founded in Quincy, Massachusetts in 1950, is famous for its combination of high-quality coffees, espresso beverages, baked goods and breakfast sandwiches served all day with fast, friendly service. Baskin-Robbins, founded in Glendale, California in 1945, is iconic for its variety of “31 flavors” of ice cream, along with the brand’s creative ice cream cakes, milkshakes and ice cream sundaes. Dunkin' Brands' 100 percent franchised business model currently includes more than 12,900 Dunkin' restaurants and more than 8,000 Baskin-Robbins restaurants.
Dunkin’ Brands believes being a good corporate citizen is good business. We set corporate social responsibility (CSR) goals to make continuous progress in the areas of sustainable sourcing, packaging, energy efficiency, waste reduction, nutrition, Diversity & Inclusion and other material issues. Additionally, on an annual basis, our franchisees around the world volunteer their time and donate product and funds to countless non-profit groups. Most notably through the Joy In Childhood (JiCF) Foundation, Dunkin’ and Baskin-Robbins franchisees provide joy to kids when they most need it.
Dunkin’, founded in Quincy, Massachusetts in 1950, is famous for its combination of high-quality coffees, espresso beverages, baked goods and breakfast sandwiches served all day with fast, friendly service. Baskin-Robbins, founded in Glendale, California in 1945, is iconic for its variety of “31 flavors” of ice cream, along with the brand’s creative ice cream cakes, milkshakes and ice cream sundaes. Dunkin' Brands' 100 percent franchised business model currently includes more than 12,900 Dunkin' restaurants and more than 8,000 Baskin-Robbins restaurants.
Dunkin’ Brands believes being a good corporate citizen is good business. We set corporate social responsibility (CSR) goals to make continuous progress in the areas of sustainable sourcing, packaging, energy efficiency, waste reduction, nutrition, Diversity & Inclusion and other material issues. Additionally, on an annual basis, our franchisees around the world volunteer their time and donate product and funds to countless non-profit groups. Most notably through the Joy In Childhood (JiCF) Foundation, Dunkin’ and Baskin-Robbins franchisees provide joy to kids when they most need it.
Financial overview of Dunkin' Brands 3rd quarter 2019 earnings results
The data below refers to the latest quarter's data (unless specified otherwise)
- Total revenues: $355.882 million (up from $350.011 million for the same quarter of the previous year)
- Total revenues increased by 1.67% over the last 12 months
- Operating expenses: $241.287 million (down from $244.027 million for the same quarter of the previous year)
- Operating expenses decreased by -1.12% over the last 12 months
- Net income: $72.365 million (up from $66.067 million for the same quarter of the previous year)
- Diluted earnings per share: $0.86 (up from $0.79 for the same quarter of the previous year)
- PE ratio of Dunkin' Brands: 22.9
- Dividend declared: $0.3750
- Dividend yield of Dunkin' Brands: 1.9%
- Number of shares in issue: 83.867 million (down from 84.107million for the same period of the previous year)
- Cash and cash equivalents: $523.374 million
- Cash and cash equivalents per share: $6.24
- Cash and cash equivalents makes up 7.9% of Dunkin' Brands' market capital
- Cash and cash equivalents makes up 13.76% of Dunkin' Brands total assets
- Accounts receivable: $82.427 million
- Accounts receivable makes up 2.16% of Dunkin' Brands total assets
- Goodwill in Dunkin' Brands: $888.280 million
- Goodwill per share: $10.59
- Goodwill makes up 23.4% of Dunkin' Brands total assets
- Cash generated from operations (for 9 months): $157.779 million
- Cash generated from operations per share (for the 9 months): $1.88
Dunkin' Brands (NASDAQ: DNKN) management commentary on 3rd quarter 2019 earnings
Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin' and Baskin-Robbins (BR), today reported results for the third quarter ended September 28, 2019.
"We delivered a strong third quarter with positive comparable store sales growth across all four of our business segments, including Baskin-Robbins best quarterly sales results in the U.S. since the fourth quarter of 2017. Dunkin' U.S. performance was led by strength in premium beverages such as espresso and cold brew, along with sales of breakfast sandwiches driven by the success of our national Go2s value platform. We also rolled out two new features in our Dunkin' U.S. digital and loyalty platform - guest ordering for Mobile On-The-Go and multi-tender payment flexibility for the DD Perks program - unlocking more choice and convenience for Dunkin's most loyal and on-the-go guests," said David Hoffmann, Dunkin' Brands Chief Executive Officer and President Dunkin' U.S. "We believe these results demonstrate that our Dunkin' U.S. Blueprint for Growth is working and the strategic investments made into the Dunkin' business last year are enabling us to drive topline results and deliver a better guest experience."
"With one quarter remaining in 2019, we are reiterating our guidance for revenue and operating income growth," said Kate Jaspon, Chief Financial Officer, Dunkin' Brands Group, Inc. "In addition to other updates to our 2019 targets, we are raising and tightening our guidance for earnings per share."
"We delivered a strong third quarter with positive comparable store sales growth across all four of our business segments, including Baskin-Robbins best quarterly sales results in the U.S. since the fourth quarter of 2017. Dunkin' U.S. performance was led by strength in premium beverages such as espresso and cold brew, along with sales of breakfast sandwiches driven by the success of our national Go2s value platform. We also rolled out two new features in our Dunkin' U.S. digital and loyalty platform - guest ordering for Mobile On-The-Go and multi-tender payment flexibility for the DD Perks program - unlocking more choice and convenience for Dunkin's most loyal and on-the-go guests," said David Hoffmann, Dunkin' Brands Chief Executive Officer and President Dunkin' U.S. "We believe these results demonstrate that our Dunkin' U.S. Blueprint for Growth is working and the strategic investments made into the Dunkin' business last year are enabling us to drive topline results and deliver a better guest experience."
"With one quarter remaining in 2019, we are reiterating our guidance for revenue and operating income growth," said Kate Jaspon, Chief Financial Officer, Dunkin' Brands Group, Inc. "In addition to other updates to our 2019 targets, we are raising and tightening our guidance for earnings per share."
COMPANY UPDATES
FISCAL YEAR 2019 TARGETS
As described below, the Company is reiterating and updating certain of its 2019 performance targets.
The foregoing non-GAAP forward-looking financial measures are reconciled from the respective measures determined under GAAP in the attached tables "Dunkin' Brands Group, Inc. and Subsidiaries Non-GAAP Reconciliations."
- During the third quarter, the Company returned $45.7 million to shareholders, including $31.0 million in dividends and $14.7 million through open market repurchases of approximately 180,000 shares. The Company's shares outstanding as of September 28, 2019 were 82,821,829.
- The Company today announced that the Board of Directors declared a cash dividend of $0.3750 per share, payable on December 11, 2019, to shareholders of record as of the close of business on December 2, 2019.
FISCAL YEAR 2019 TARGETS
As described below, the Company is reiterating and updating certain of its 2019 performance targets.
- The Company continues to expect low-single digit comparable store sales growth for Dunkin' U.S. and flat to slightly negative comparable store sales growth for Baskin-Robbins U.S.
- The Company continues to expect to be at the low end of the range of 200 to 250 net new Dunkin' U.S. units. It continues to expect new Dunkin' U.S. restaurants opened in 2019 will contribute at least $130 million in systemwide sales in 2019.
- The Company continues to expect Baskin-Robbins U.S. franchisees to close approximately ten net units.
- The Company continues to expect low-to-mid single digit percent revenue growth.
- The Company continues to expect low-to-mid single digit percent other revenue growth driven by consumer packaged goods.
- The Company now expects ice cream margin dollars to be approximately $16 million (previously flat compared to 2018 margin of $17.8 million).
- The Company continues to expect net income of equity method investments (JV net income) to be flat compared to 2018.
- The Company continues to expect a mid-single digit percent reduction to general and administrative expenses.
- The Company continues to expect mid-to-high single digit percent operating and adjusted operating income growth.
- The Company now expects its full-year effective tax rate to be approximately 25% (previously 27%) and continues to expect net interest expense to be approximately $119 million. The tax guidance excludes any potential future impact from material excess tax benefits in the fourth quarter of 2019.
- The Company continues to expect full-year weighted-average shares outstanding of approximately 84 million.
- The Company now expects GAAP diluted earnings per share of $2.80 to $2.85 (previously $2.71 to $2.78) and diluted adjusted earnings per share of $3.10 to $3.12 (previously $3.02 to $3.05).
- The Company continues to expect capital expenditures to be approximately $40 million.
The foregoing non-GAAP forward-looking financial measures are reconciled from the respective measures determined under GAAP in the attached tables "Dunkin' Brands Group, Inc. and Subsidiaries Non-GAAP Reconciliations."
Dunkin' Brands (NASDAQ: DNKN) stock price history
The image below obtained from Google, shows the stock price history of Dunkin' Brands over the last 5 years. And its been a very good time for Dunkin' Brands stockholders. 5 years ago the stock of Dunkin' Brands was trading at around $47 a stock and its currently trading at $78.62 a stock. That's a very healthy return of 67.3% provided to Dunkin' Brands stockholders over the last 5 years.
The stock of Dunkin' Brands is trading at a lot closer to its 52 week high of $84.74 than it is to its 52 week low of $61.69 a stock, which to us is a clear indication that the short term sentiment and momentum of Dunkin' Brands stock is very positive at this point in time,
The stock of Dunkin' Brands is trading at a lot closer to its 52 week high of $84.74 than it is to its 52 week low of $61.69 a stock, which to us is a clear indication that the short term sentiment and momentum of Dunkin' Brands stock is very positive at this point in time,
Recent coverage of Dunkin' Brands
The extract below discusses the latest regarding Dunkin' Brands as obtained from TheStreet.com
Shares of donut and coffee chain and Baskin-Robbins ice cream owner Dunkin' Brands (DNKN - Get Report) jumped on Thursday after the company reported better-than-expected third-quarter earnings on strong demand for premium breakfast sandwiches and specialty coffees at its U.S.-based Dunkin' Donuts stores, though total sales fell short of analysts' forecasts. The Canton, Mass.-based posted adjusted earnings of $75.7 million, or 90 cents a share, vs. $69.9 million, or 83 cents a share, in the comparable year-ago quarter. Analysts polled by FactSet had been expecting per-share earnings of 81 cents. Sales rang in at $355.9 million, up from $350 million a year ago though below analysts' forecasts of $359 million. Same-store sales within Dunkin' Donuts gained 1.5%, while same-store sales among Baskin-Robbins outlets grew 3.6%, the company said.
Read the full article here
Shares of donut and coffee chain and Baskin-Robbins ice cream owner Dunkin' Brands (DNKN - Get Report) jumped on Thursday after the company reported better-than-expected third-quarter earnings on strong demand for premium breakfast sandwiches and specialty coffees at its U.S.-based Dunkin' Donuts stores, though total sales fell short of analysts' forecasts. The Canton, Mass.-based posted adjusted earnings of $75.7 million, or 90 cents a share, vs. $69.9 million, or 83 cents a share, in the comparable year-ago quarter. Analysts polled by FactSet had been expecting per-share earnings of 81 cents. Sales rang in at $355.9 million, up from $350 million a year ago though below analysts' forecasts of $359 million. Same-store sales within Dunkin' Donuts gained 1.5%, while same-store sales among Baskin-Robbins outlets grew 3.6%, the company said.
Read the full article here
Dunkin' Brands (NASDAQ: DNKN) stock valuation
So what do we value Dunkin' Brands stock at after the release of their 3rd quarter 2019 earnings and the fiscal guidance provided for the full fiscal 2019? Based on Dunkin' Brands earnings report and fiscal guidance provided our valuation models provides a target (full value) price of Dunkin' Brands at $61.70 a stock. We therefore believe that the stock of Dunkin' Brands is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $61.70 therefore we believe a good entry point into Dunkin' Brands stock is at $55.50 or below. We expect the stock of Dunkin' Brands to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Dunkin' Brands as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $61.70 therefore we believe a good entry point into Dunkin' Brands stock is at $55.50 or below. We expect the stock of Dunkin' Brands to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Dunkin' Brands as a sell
Next earnings release of Dunkin' Brands
It is expected that Dunkin' Brands will publish their 4th quarter and full fiscal 2019 earnings report in early February 2020