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Category: Stock Market and Dunkin' Brands
Date: 7 February 2020 Stock Price: $75.03 We take a look at the 4th 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.
Overview of Dunkin' Brands 4th quarter 2019 earnings report
The data below refers to the latest quarter's data (unless specified otherwise)
- Total revenues: $335.997 million (up from $319.624 million for the same quarter of the previous year)
- Total revenues increased by 5.1% over the last 12 months
- Operating expenses: $234.672 million (up from $225.382 million for the same quarter of the previous year)
- Operating expenses increased by 4.1% over the last 12 months
- Net income: $57.714 million (up from $53.109 million for the same quarter of the previous year)
- Diluted earnings per share: $0.69 (up from $0.64 for the same quarter of the previous year)
- PE ratio of Dunkin' Brands: 25.9
- Dividend declared: $0.4025
- Dividend yield of Dunkin' Brands: 2.1%
- Number of shares in issue: 83.702 million (down from 83.744 million for the same period of the previous year)
- Cash and cash equivalents: $621.152 million
- Cash and cash equivalents per share: $7.42
- Cash and cash equivalents makes up 9.89% of Dunkin' Brands' market capital
- Cash and cash equivalents makes up 15.84% of Dunkin' Brands total assets
- Accounts receivable: $76.019 million
- Accounts receivable makes up 1.9% of Dunkin' Brands total assets
- Goodwill in Dunkin' Brands: $888.286 million
- Goodwill per share: $10.61
- Goodwill makes up 22.6% of Dunkin' Brands total assets
- Cash generated from operations (for full fiscal year): $297.734 million
- Cash generated from operations per share (for the full fiscal year): $3.55
Dunkin' Brands (NASDAQ: DNKN) management commentary on 4th quarter 2019 earnings
CANTON, Mass., Feb. 6, 2020 /PRNewswire/
Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin' and Baskin-Robbins (BR), today reported results for the fourth quarter and fiscal year ended December 28, 2019.
"Our strong performance in 2019 is indicative of the progress we're making to transform our two beloved brands around the world. All business segments delivered positive comparable store sales growth in the fourth quarter and for the fiscal year, reflecting broad-based momentum across the system," said Dave Hoffmann, Dunkin' Brands Chief Executive Officer. "We had a strong finish to the year, led by Dunkin' U.S. comparable store sales growth of 2.8 percent in the fourth quarter, the highest quarterly comparable sales growth in six years, fueled by espresso and cold brew sales, coupled with the successful launch of the Beyond Sausage® Sandwich, and sustained performance of our national value platforms. Better quality food and beverage enabled by better equipment is a cornerstone of the Dunkin' Blueprint for Growth, which is the reason we are investing $60 million in high-volume brewers for our franchisees' restaurants in 2020 as part of our commitment to beverage leadership."
Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin' and Baskin-Robbins (BR), today reported results for the fourth quarter and fiscal year ended December 28, 2019.
"Our strong performance in 2019 is indicative of the progress we're making to transform our two beloved brands around the world. All business segments delivered positive comparable store sales growth in the fourth quarter and for the fiscal year, reflecting broad-based momentum across the system," said Dave Hoffmann, Dunkin' Brands Chief Executive Officer. "We had a strong finish to the year, led by Dunkin' U.S. comparable store sales growth of 2.8 percent in the fourth quarter, the highest quarterly comparable sales growth in six years, fueled by espresso and cold brew sales, coupled with the successful launch of the Beyond Sausage® Sandwich, and sustained performance of our national value platforms. Better quality food and beverage enabled by better equipment is a cornerstone of the Dunkin' Blueprint for Growth, which is the reason we are investing $60 million in high-volume brewers for our franchisees' restaurants in 2020 as part of our commitment to beverage leadership."
"We are pleased to have delivered on our revenue, operating income, and earnings per share targets for 2019. We also achieved our Dunkin' U.S. net development goal for the year, exceeded our first-year sales goals for new restaurants, and ended the year with more than 500 new and remodeled NextGen restaurants," said Kate Jaspon, Dunkin' Brands Chief Financial Officer. "We will be exiting 450 limited-menu Dunkin' Speedway owned and operated locations throughout 2020, closing under a termination agreement entered into with Speedway. These limited-menu locations are lower volume units, in total representing less than 0.5 percent of Dunkin' U.S. annual systemwide sales. By exiting these sites, with minimal financial impact, we're confident we'll be better positioned to serve many of these trade areas in the coming years with new Dunkin' NextGen restaurants that offer a broader menu."
COMPANY UPDATES
FISCAL YEAR 2020 TARGETS
The Company is providing the following fiscal year 2020 performance targets:
LONG-TERM TARGETS*
The Company reiterates its previously announced long-term targets through fiscal year 2021:
COMPANY UPDATES
- During the fourth quarter, the Company returned $36.0 million to shareholders, including $31.1 million in dividends and $4.9 million through open market repurchases of approximately 65,000 shares. The Company's shares outstanding as of December 28, 2019 were 82,834,830.
- The Company today announced that the Board of Directors declared a cash dividend of $0.4025 per share, payable on March 18, 2020, to shareholders of record as of the close of business on March 9, 2020. This represents a 7.3 percent increase over the prior quarter's dividend.
- The Company today announced that the Board of Directors approved a new program for the repurchase of up to $250 million of the Company's common stock. The authorization is good for a period of two years.
FISCAL YEAR 2020 TARGETS
The Company is providing the following fiscal year 2020 performance targets:
- The Company expects low-single digit comparable store sales growth for Dunkin' U.S. and low-single digit comparable store sales growth for Baskin-Robbins U.S.
- The Company expects to open between 200 to 250 net new Dunkin' U.S. units, excluding approximately 450 limited menu Dunkin' Speedway locations which are closing under a termination agreement entered into with Speedway and are expected to close by fiscal year end 2020. These locations represented less than 0.5% of Dunkin' U.S. annual systemwide sales in 2019. As a result of this strategic decision, in 2020 the Company will report development results both with and without the Speedway closures included until the exit is completed.
- The Company expects new Dunkin' U.S. restaurants opened in 2020 will contribute greater than $140 million in systemwide sales in 2020.
- The Company expects Baskin-Robbins U.S. franchisees to close approximately 25 net units.
- The Company expects low-to-mid single digit percent revenue growth.
- The Company expects ice cream margin dollars to be flat compared to 2019.
- The Company expects net income of equity method investments (JV net income) to be flat compared to 2019.
- The Company expects low-single digit percent growth to general and administrative expenses.
- The Company expects mid-single digit percent operating and adjusted operating income growth, reflecting an approximately $60 million strategic investment for continued beverage leadership.
- The Company expects its full-year effective tax rate to be approximately 27% and expects net interest expense to be approximately $121 million.
- The Company expects full-year weighted-average shares outstanding of approximately 84 million.
- The Company expects GAAP diluted earnings per share of $2.96 to $3.05 and diluted adjusted earnings per share of $3.16 to $3.21.
- The Company expects capital expenditures to be approximately $40 million.
LONG-TERM TARGETS*
The Company reiterates its previously announced long-term targets through fiscal year 2021:
- The Company expects low-single digit percent comparable store sales growth for Dunkin' U.S.
- The Company expects Dunkin' U.S. franchisees to open between 200 and 250 net new units annually.
- The Company expects low-to-mid single digit percent revenue growth.
- The Company expects low-single digit percent general and administrative expense growth.
- The Company expects mid-to-high single digit percent operating and adjusted operating income growth (in 2021).
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 $46.70 a stock and its currently trading at $75.03 a stock. That's a very healthy return of 60.6% provided to Dunkin' Brands stockholders over the last 5 years.
The stock of Dunkin' Brands is trading at a little closer to its 52 week high of $84.74 than it is to its 52 week low of $64.11 a stock, which to us is an indication that the short term sentiment and momentum of Dunkin' Brands stock is neutral to slightly positive.
The stock of Dunkin' Brands is trading at a little closer to its 52 week high of $84.74 than it is to its 52 week low of $64.11 a stock, which to us is an indication that the short term sentiment and momentum of Dunkin' Brands stock is neutral to slightly positive.
Recent coverage of Dunkin' Brands
The extract below discusses the latest regarding Dunkin' Brands as obtained from TheStreet.com
Doughnut and coffee chain and Baskin-Robbins ice cream owner Dunkin’ Brands (DNKN) on Thursday reported better-than-expected fourth-quarter earnings amid ongoing demand for specialty coffees and premium sandwiches and at B&R, ice cream. The Canton, Mass.-based company posted adjusted net income of $61.2 million, or 73 cents a share, in its fourth quarter ended Dec. 28, vs. $57.3 million, or 68 cents a share, in the comparable year-ago quarter. Analysts polled by FactSet had been expecting per-share earnings of 70 cents.
Sales rang in at $335.9 million, up from $319.6 million a year ago though a few servings shy of analysts’ forecasts of $336.1 million. Same-store sales within Dunkin’ Donuts gained 2.8%, while same-store sales among Baskin-Robbins outlets grew 4.1%, the company said. "All business segments delivered positive comparable store sales growth in the fourth quarter and for the fiscal year, reflecting broad-based momentum across the system," CEO Dave Hoffmann said in a statement, noting the company achieved "the highest quarterly comparable sales growth in six years, fueled by espresso and cold brew sales, coupled with the successful launch of the Beyond Sausage sandwich.”
Read the full article here
Doughnut and coffee chain and Baskin-Robbins ice cream owner Dunkin’ Brands (DNKN) on Thursday reported better-than-expected fourth-quarter earnings amid ongoing demand for specialty coffees and premium sandwiches and at B&R, ice cream. The Canton, Mass.-based company posted adjusted net income of $61.2 million, or 73 cents a share, in its fourth quarter ended Dec. 28, vs. $57.3 million, or 68 cents a share, in the comparable year-ago quarter. Analysts polled by FactSet had been expecting per-share earnings of 70 cents.
Sales rang in at $335.9 million, up from $319.6 million a year ago though a few servings shy of analysts’ forecasts of $336.1 million. Same-store sales within Dunkin’ Donuts gained 2.8%, while same-store sales among Baskin-Robbins outlets grew 4.1%, the company said. "All business segments delivered positive comparable store sales growth in the fourth quarter and for the fiscal year, reflecting broad-based momentum across the system," CEO Dave Hoffmann said in a statement, noting the company achieved "the highest quarterly comparable sales growth in six years, fueled by espresso and cold brew sales, coupled with the successful launch of the Beyond Sausage sandwich.”
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 4th quarter 2019 earnings and the fiscal guidance provided for the full fiscal 2020? Based on Dunkin' Brands earnings report and fiscal guidance provided our valuation models provides a target (full value) price of Dunkin' Brands at $57.90 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 $57.90 therefore we believe a good entry point into Dunkin' Brands stock is at $52.10 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 $57.90 therefore we believe a good entry point into Dunkin' Brands stock is at $52.10 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 1st quarter 2020 earnings report in early May 2020