Why Dunkin’ Brands’ 1Q17 Earnings Failed to Impress
Dunkin’ Brands (DNKN), which operates Dunkin’ Donuts and Baskin-Robbins brands, announced its 1Q17 earnings on May 4, 2017. It posted adjusted EPS (earnings per share) of $0.54 on revenues of $190.7 million.
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Analysts were expecting the company to post EPS of $0.48 on revenues of $192.2 million. The lower-than-expected 1Q17 revenue and the disappointing SSSG (same-store sales growth) for both brands appear to have made investors skeptical of Dunkin’ Brands’ future earnings, leading to a fall in the stock. As of May 9, 2017, Dunkin’ Brands was trading at $55.13, which represents a fall of 2.2% since the announcement of its 1Q17 earnings.
Last year was a good year for Dunkin’ Brands. DNKN stock rose 23.1% in 2016. However, it has risen only 5.1% since the beginning of 2017. During the same period, peers Starbucks (SBUX) and Panera Bread (PNRA) rose 9.8% and 52.6%, respectively.
The broader comparative indexes, the S&P 500 Index (SPX-INDEX) and the Consumer Discretionary Select Sector SPDR ETF (XLY), have risen 7.1% and 11.6%, respectively, year-to-date.
In this series, we’ll be looking at Dunkin’ Brands’ 1Q17 results by comparing them against its 1Q16 performance and analysts’ estimates. We’ll also look at management’s guidance and analysts’ estimates for the next four quarters. Finally, we’ll wrap up the series by looking at Dunkin’ Brands’ valuation multiples and analysts’ recommendations.
Let’s start by looking at Dunkin’ Brands’ 1Q17 revenue.