Key Takeaways From Dunkin’ Brands Q4 2017 Earnings
Dunkin’ Brands (NASDAQ:DNKN) announced its Q4 2017 results on February 6th 2018 and the company beat analyst expectations by reporting a year on year revenue growth of 5.3% against expectations of around 2%. The company had its highest quarterly beverage comparable sales in Q4 2017 primarily driven by iced coffee and Frozen Dunkin’ coffee. Dunkin’ Donuts U.S. registered a comparable sales growth of 0.8% in Q4 2017 driven by an increase in average ticket size, offset by a decline in traffic. Comparable sales growth remained a challenge for the company in 2017 with a growth of 0.6% in the year for Dunkin’ Donuts U.S. and flat comparable sales for Baskin-Robbins U.S. in 2017.
The charts below summarize the company’s performance in Q4 2017
The below chart created from our interactive model analyzes the impact of a change in our revenue and EPS forecasts for 2018 on the price estimate of the company.
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You can click here to access these charts and modify our estimates for 2018.
The company is focusing on beverages in the morning day part and this strategy has resulted in higher morning traffic numbers in Q4 2017 – strongest in the last two years. Value promotions have been another significant revenue driver for the company in this quarter and sales of breakfast sandwiches are growing consistently. Baskin-Robbins U.S. showed strong comparable sales growth in Q4 2017 driven by shakes, smoothies, and the take home initiative.
Going Forward:
- Dunkin’ Brands is likely to benefit from the new U.S. tax laws and its estimated effective tax rate of 2018 is 28%, as against our previous estimate of around 37%.
- In 2018, the company will focus aggressively on afternoon traffic through afternoon-leaning beverages and all-day value offers.
- Dunkin’ Brands will accelerate its efforts to remodel as many restaurants as possible into its “Next Generation Stores” in 2018, which are aimed towards effective execution of its digital initiatives.
- The company will announce its financial targets for 2018 and other strategic initiatives for the year at its investor day on February 8th 2018 and we will highlight those via a separate note.
We will update our model based on the above earnings and the company’s growth targets announced later this week and this update can lead to a change in our price estimate for the company.
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