Wedbush’s upgrade appears to have increased investors’ confidence, as Dunkin’ Brands (DNKN) hit a 52-week high of $83.22 in today’s trading. However, the stock gave away some of the gains and was trading at $81.07 at 11:30 AM today, representing a rise of 1.9% from its previous day’s closing price.
Year-to-date stock performance
Dunkin’ Brands has returned 24.0% YTD as of June 21, outperforming the broader equity market, where the S&P 500 Index has increased 17.7%. Also, during the same period, DNKN peers Starbucks (SBUX) and McDonald’s (MCD) have returned 30.2% and 15.0%, respectively.
Dunkin’ Brand’s stock was driven by its impressive first-quarter earnings, the announcement of the delivery partnership with Grubhub, and its aggressive expansion plans. In the first quarter, DNKN reported adjusted EPS of $0.67 on revenues of $319.1 million, outperforming analysts’ EPS expectation of $0.62 and revenues of $312.4 million. On June 17, Dunkin’ announced it would partner with Grubhub to roll out delivery service across its Dunkin’ restaurants in the US.
The surge in Dunkin’ Brands stock since the beginning of this year has also raised its valuation multiple. As of June 21, the company was trading at a forward PE multiple of 25.6x compared to 21.5x at the beginning of 2019. In comparison, peers Starbucks and McDonald’s were trading at forward PE multiple of 28.0x and 24.5x, respectively.
For 2019, analysts expect Dunkin’ Brands to report revenue of $1.37 billion, which implies a rise of 3.9% from $1.32 billion in 2018. During the same period, its EPS are expected to rise by 3.4% to $3.00 from $2.90.
You may also be interested in reading our recently published article Dunkin’ Brands Up ~9% since Q1 Earnings: What’s Next?