Dunkin’ Brands (NASDAQ: DNKN), a Canton Massachusetts based company, sells coffee, donuts, ice cream and breakfast and lunch items chiefly in the Eastern United States. When the air has a nip, and the leaves change color, customers flock to the local Dunkin’ Donuts to grab one of their signature pumpkin doughnuts and a hot cup of coffee. With third quarter earnings just out, this fall has been particularly good for the Dunkin’ Brands Corporation.
Dunkin’ Brands, a combination of Dunkin Donuts and Baskin Robbins, hit the market in July of 2011 with an IPO valued at $19 per share. It sold 22.25 million shares and raised a fairly nice chunk of change at $422.75 million. Over the past year the company’s share price has risen over 60% as the company expands its doughnut shops west of the Mississippi. Shares this week are selling for just over $30. The company has a market cap of $3.29 billion with shares outstanding of 105.5 million. Dunkin’ Brands boasts a sales growth of +8.81% and an income growth of +28.2%. That’s one mighty tasty doughnut.
Third quarter net income was $29.5 million or $0.26 a share as revenue rose 5% to $171.7 million. Dunkin’ Donuts sales rose 2.8% in the third quarter in the U.S. while Baskin Robbins’ sales nudged up internationally by 1.1%. Dunkin’ Brands opened 187 new restaurants globally in the third quarter of 2012, a higher than anticipated growth in brick and mortar operations. CEO Nigel Travis said that the chains domestic business was the largest contributor to profits. The company’s cold beverages, breakfast and lunch sandwiches and coffee were the big earners for the third quarter. Dunkin’ Brands’ operating margin rose from 33.1% to 41% in the quarter. The company also affirmed a quarterly cash dividend of $0.15 a share.
Dunkin’ Brands has an asset-light business model, low-risk expansion strategy, and tremendous growth opportunities both domestically and abroad. The company looks healthy and analysts are bullish. Investors should look to this as a long-term commitment when adding it to their portfolios. Go grab a pumpkin doughnut and a few shares of Dunkin’ Brands. You won’t be sorry on either count.