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Will Dunkin’ Brands’ 4Q17 Earnings per Share Outperform?

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Feb. 1 2018, Updated 7:34 a.m. ET

EPS expectations

In 4Q17, Dunkin’ Brands (DNKN) has posted an adjusted EPS (earnings per share) of $0.63, which represents a fall of 1.6% from $0.64 in 4Q16. The fall in EPS is expected to be driven by a decline in the company’s EBIT margins. Analysts are expecting Dunkin’ Brands’ EBIT margins to contract from 55.3% in 4Q16 to 54.7%. However, some of the declines are expected to be offset by revenue growth and share repurchases.

During the first three quarters of 2017, Dunkin’ Brands has repurchased 2.27 million shares for approximately $127.2 million. Share repurchases reduce the number of shares outstanding, boosting EPS.

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Peer comparisons and outlook

During the same period, Starbucks (SBUX) posted EPS growth of 11.5% while McDonald’s (MCD) and Wendy’s (WEN) are expected to post EPS growth of 11.0% and 39.9%, respectively.

For the next four quarters, analysts are expecting Dunkin’ Brands to post EPS of $2.73 in the next four quarters, which represents growth of 12.3% from $2.43 in the corresponding four quarters of the previous year.

Dividends

In 3Q16, Dunkin’ Brands paid dividends of $0.32 per share at a payout ratio of 53.3% and a dividend yield of 1.9%, given the stock price at $66.56 as of January 29. For 4Q17, analysts expect the company to continue paying dividends of $0.32 to take the total for 2017 to $1.28, which represents growth of 6.7% from $1.20.

Next in this series, we’ll look at Dunkin’ Brands’ valuation multiple.

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