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Why Investors Are Optimistic about Dunkin’ Brands’ Q2 Earnings

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Dec. 4 2020, Updated 10:53 a.m. ET

Stock performance

Dunkin’ Brands (DNKN) is scheduled to post its second-quarter earnings before the market opens on July 26. As of July 23, Dunkin’ Brands was trading at $72.45, which represents a rise of 16.5% since the announcement of its first-quarter earnings on April 26.

During the first quarter, Dunkin’ Brands missed analysts’ SSSG (same-store sales growth) and revenue estimates. However, it beat analysts’ EPS (earnings per share) estimate of $0.53 with adjusted EPS of $0.62. After posting its first-quarter earnings, the company’s management raised its 2018 EPS guidance due to a revision in its share count and effective tax rate. On May 22, the company’s management had approved a new share repurchase program of $250.0 million. Also, the initiatives adopted by the company’s management to drive its sales such as positioning the company as a beverage-led brand, implementing its mobile-based “On-the-Go” initiative, and lowering its G&A (general and administrative) expenses appear to have increased investors’ confidence, leading to a rise in the company’s stock price.

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Year-to-date performance

Since the beginning of 2018, Dunkin’ Brands has returned 12.4%. During the same period, Starbucks (SBUX) and McDonald’s (MCD) have fallen 10.9% and 7.8%, respectively. The S&P 500 Index (SPY) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 4.8% and 13.4%, respectively.

Series overview

With Dunkin’ Brands’ second-quarter earnings around the corner, we’ll look at analysts’ revenue and EPS expectations. We’ll also cover the management’s guidance for 2018 and analysts’ estimates for the next four quarters. Finally, we’ll end this series by looking at analysts’ recommendations and the company’s valuation multiple.

First, let’s start by looking at analysts’ revenue expectations for the second quarter.

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