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Dunkin’ Brands Up ~9% since Q1 Earnings: What’s Next?

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Jun. 19 2019, Updated 4:08 p.m. ET

Stock performance

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

In the first quarter, Dunkin’ Brands reported adjusted EPS of $0.67, outperforming analysts’ expectation of $0.62 by 8.1%, while its revenue of $319.1 million was higher than analysts’ expectation of $312.4 million. Also, the company posted SSSG (same-store sales growth) of 2.4% for its Dunkin’ brand restaurants in the US, beating analysts’ expectation of 1.4%.

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On July 17, Dunkin’ announced that it would partner with Grubhub to roll out a delivery service across its Dunkin’ restaurants in the US. Earlier, on May 8, the company’s management announced that Dunkin’ had signed a development agreement to open 50 new restaurants as the company continues its expansion efforts outside of the Northeast of the U.S. The impressive first-quarter performance, delivery partnership with Grubhub, and its aggressive expansion plans appear to have contributed to a rise in Dunkin’ Brands’ stock price.

Year-to-date performance

YTD, Dunkin’ Brands has returned 24.9%, outperforming the broader equity market. The S&P 500 Index has increased by 16.4% since the beginning of this year, while the Consumer Discretionary Select Sector SPDR ETF (XLY), which has invested 7.6% of its holdings in restaurant and travel companies, has returned 20.6%. Starbucks (SBUX) and McDonald’s (MCD) have returned 28.8% and 15.2% YTD, respectively.

 

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