Analysts’ recommendations

Dunkin’ Brands’ (DNKN) impressive first-quarter earnings appear to have prompted analysts to raise their price targets. Since DNKN reported its first-quarter earnings, UBS, Mizuho, Morgan Stanley, J.P. Morgan, Cowen and Company, and Wedbush have all raised their price targets:

  • UBS from $72 to $75
  • Mizuho from $61 to $66
  • Morgan Stanley from $68 to $71
  • J.P. Morgan from $72 to $74
  • Cowen and Company from $67 to $74
  • Wedbush from $74 to $76

Overall, analysts favor a “hold” rating for the stock with 81.5% of the total 26 analysts that follow the company giving it a “hold” recommendation, while 14.8% are recommending a “buy,” and 3.7% are recommending a “sell.” On average, analysts have set a 12-month price target of $75.94, which implies a fall of 5.2% from its stock price of $80.07.

Analysts Rate Dunkin’ Brands a ‘Hold’

Peer comparisons

Of the total 31 analysts that are covering McDonald’s, 77.4% have given the stock a “buy” rating, while the remaining 22.6% are in favor of a “hold” rating. Analysts have a 12-month price target of $216.72 with return potential of 6.0% from its stock price of $204.51.

Of the 31 analysts that follow Starbucks (SBUX), 61.3% are favoring a “hold” rating, while 35.5% are recommending a “buy,” and 3.2% are advocating a “sell” rating. Analysts have given the stock a 12-month price target of $79.13, which represents a fall of 4.6% from its stock price of $82.92.

Valuation multiple

The surge in Dunkin’ Brands’ stock price since the announcement of its first-quarter earnings has also raised its valuation multiple. As of June 18, the company was trading at a forward PE multiple of 25.8x compared to 24.0x before the announcement of its first-quarter earnings. In comparison, its peers, Starbucks (SBUX) and McDonald’s (MCD) were trading at forward PE multiples of 27.7x and 24.5x, on June 18, respectively.

Also, Dunkin’ Brands was trading at 26.7 times analysts’ 2019 EPS estimate of $3.00, and 24.7 times analysts’ 2020 EPS estimate of $3.24 with its EPS expected to rise by 3.3% in 2019 and 8.1% in 2020.

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