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Can New Beverages Boost Dunkin’ Brands’ Sales?

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Updated

Revenue estimates

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 2Q16, Dunkin’ Donuts’ revenue formed more than 76% of Dunkin’ Brands. Its US operations generated 96% of Dunkin’ Donuts’ sales.

In the next four quarters, Dunkin’ Brands is expected to post revenue of $857.9 million—YoY (year-over-year) growth of 4.7%. With Dunkin’ Donuts expected to launch its ready-to-drink coffee beverage in the early part of 2017 in the US, analysts expect the company to post revenue growth of 3.7% and 4.5% in 1Q17 and 2Q17. respectively.

It should be noted that Dunkin’ Brands has been partnering with Coca-Cola (KO) since 2012. It serves Coca-Cola products in its restaurants in the US as well a select markets around the world.

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EPS estimates

With most of its restaurants being franchised, the company announced that it would equally share the profits from the sales of ready-to-drink coffee beverages through outlets other than its restaurants with its qualified franchisees.

Analysts expect Dunkin’ Brands to post EPS (earnings per share) of $2.3 in the next four quarters—YoY growth of 37.2%. During the same period, Dunkin’s peers such as Starbucks (SBUX), Panera Bread (PNRA), and Yum! Brands (YUM) are expected to post EPS growth of 19.5%, 7.5%, and 6.6%.

Next, we’ll look at analysts’ recommendations and 12-month target prices for Dunkin’ Brands. It forms 0.31% of the iShares Core S&P Mid-Cap ETF (IJH).

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