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What to Expect from Dunkin' Brands' 4Q16 Earnings

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Part 2
What to Expect from Dunkin' Brands' 4Q16 Earnings PART 2 OF 6

What Do Analysts Expect from Dunkin’ Brands’ 4Q16 Revenue?

Revenue sources

Dunkin’ Brands (DNKN) earns its revenue from five different channels: Dunkin’ Donuts US, Dunkin’ Donuts International, Baskin-Robbins US, Baskin-Robbins International, and Others.

In 3Q16, Dunkin’ Donuts US generated 73.6% of DNKN’s total revenue, while Dunkin’ Donuts International, Baskin-Robbins US, Baskin-Robbins International, and Others generated 2.1%, 6.7%, 13.5%, and 4.1% of its total revenue, respectively.

What Do Analysts Expect from Dunkin&#8217; Brands&#8217; 4Q16 Revenue?

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4Q16 revenue estimates

Analysts expect Dunkin’ Brands to post revenue of $215.7 million in 4Q16, representing a rise of 5.8% from its revenue of $203.8 million in 4Q15. This revenue growth is expected to be driven by same-store sales growth (or SSSG) and the addition of new franchised restaurants.

In the first three quarters of 2016, the company added a net of 258 Dunkin’ Donuts stores and 169 Baskin Robbins stores. For 2016, the company expects Dunkin’ Donuts US to post SSSG in the range of 0%–2% and Baskin-Robbins US to post SSSG in the range of 1%–3%.

The company has adopted a five-part strategy to drive its SSSG: coffee leadership, targeted value offers and smart pricing, faster innovation, an improved restaurant experience, and digital leadership.

Analysts expect Dunkin’ Donuts’ 4Q16 SSSG to be driven by the introduction of its holiday beverages such as the Crème Brulée Macchiato, its lattes and coffees, its new Candy Cane Crunch Donut, and its new Boston Kreme Croissant Donut. 

The enhancement of its customer experience via technological advancements such as the DD mobile app, the DD Perks rewards program, and On-the-Go ordering and delivering are also expected to contribute to Dunkin’ Donuts’ 4Q16 SSSG.

Baskin Robbins’s SSSG is expected to be driven by the introduction of festive frozen treats such as the Ganache Poinsettia cake and the expansion of its Polar Pizza Ice Cream via its launch of the Peppermint & Winter Oreo Cookies Polar Pizza and the Peppermint Bark in the Dark ice cream.

Peer comparisons

In 4Q16, Starbucks (SBUX) posted a revenue rise of 6.7%. Panera Bread (PNRA) is expected to post a revenue rise of 5.3% in the quarter.

Outlook

For the next four quarters, analysts expect DNKN to post revenue of $850.8 million, representing a rise of 4.1% over the corresponding quarters of the previous year. This revenue growth is expected to be driven by unit growth and SSSG.

Also, in collaboration with Coca-Cola, the company is launching bottled iced coffee in early 2017. This new product is expected to contribute to the company’s revenue growth.

Next, let’s look at Dunkin’s estimated 4Q16 earnings margins.

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