Dunkin’ Brands (NASDAQ: DNKN) adds Profits to Fall Menu
Dunkin’ Brands (NASDAQ: DNKN) adds Profits to Fall Menu
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.
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The company looks good and has grown globally as well as domestically. I think its biggest competitors are probably Krispy Kreme (mighty fine doughnuts, especially when they turn the HOT sign on) and Starbucks for coffee.
I think it will continue to grow in the long-term as it is looking for expansion to Western states.
Tough to argue with such amazing growth in profit margins. Dunkin has been a great value play for sometime, and looking ahead the next couple of quarters that should hold true.
Pumpkin doughnuts? Can’t get that at Krispy Kreme!
How are international sales doing? I bet they are also performing well.
Growing internationally, but a lot more competition overseas as many still prefer the local cafe
the fact that sales in Dunkin’s home market are doing well signals a lot of hope for the company. it will however have to work more in the international front. Consumers tend to have an unwavering degree of loyalty to their home brands and this could pose a huge challenge if the company doesn’t use effective marketing campaigns.
I need a pumpkin doughnut now.
I love the stock and the donuts/coffee. Looking to be long over the long haul. Good growth and expansion opportunities in Western US and internationally.
What about Dunkin losing its request to trademark the slogan “Best Coffee in America”? Of any importance?
I don’t think so. Folks who buy coffee are concerned with quality and the slogan will not take anything away from their customer base.