X
<

What the Market Expects from Dunkin’ Brands' 2Q17

PART:
1 2 3 4 5 6
Part 3
What the Market Expects from Dunkin’ Brands' 2Q17 PART 3 OF 6

Why Analysts Expect Dunkin’ Brands’ Earnings Margin to Expand

2Q17 estimates

For 2Q17, analysts expect Dunkin’ Brands (DNKN) to post EBIT (earnings before interest and tax) of $117.4 million, which represents an EBIT margin of 53.1%. Comparatively, in 2Q16, the company posted an EBIT margin of 51.4%.

Why Analysts Expect Dunkin&#8217; Brands&#8217; Earnings Margin to Expand

Interested in DNKN? Don't miss the next report.

Receive e-mail alerts for new research on DNKN

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

Factors that could drive DNKN’s margins

The expansion in Dunkin’ Brands EBIT margins is expected to be driven by sales leverage from positive same-store sales growth, the refranchising of company-owned restaurants, and lower SG&A (selling, general and administrative) and D&A (depreciation and amortization) expenses.

DNKN operated 29 company-owned distribution points in 2Q16. The refranchising of these restaurants along with sales leverage and lower costs for ice cream and other products are expected to lower the company’s cost of sales from 21.8% in 2Q16 to 18.3% of the total revenue in 2Q17. During the quarter, the company’s SG&A expenses are expected to fall from 31.8% to 29.3%, while its D&A expenses are expected to fall from 5.0% to 3.3%.

Peer comparison

In 2Q17, analysts expect Starbucks (SBUX), McDonald’s (MCD), and Wendy’s (WEN) to post EBIT margins of 20.9%, 36.0%, and 18.2%, respectively.

Outlook

For the next four quarters, analysts expect Dunkin’ Brands to post an EBIT margin of 53.5%, compared to 53.3% in the previous four quarters. This expansion is expected to be driven by sales leverage and lower SG&A expenses.

Next, we’ll look at Dunkin’ Brands’ earnings estimates for 2Q17.

X

Please select a profession that best describes you: