Dunkin’ Brands (NASDAQ:DNKN) is slated to release its Q4 and full-year 2019 results on February 6, 2020. We believe that Dunkin’ Brands’ Revenues will be slightly higher than consensus and earnings will miss consensus. We expect Dunkin’ Brands to report revenues of $1.38 billion (vs. consensus estimate of $1.37 billion), which would be 4.3% higher than the previous year. Earnings are likely to be around $2.82 (vs. consensus estimate of $3.13), higher than $2.71 reported in 2018, due to better Total Revenue partially offset by a lower net income margin. Our forecast indicates that Dunkin’ Brands’ Valuation is $80 per share, which is in line with its current market price of roughly $79.
A] Revenue expected to be slightly above Consensus
- Total revenues have increased from $1.25 billion in 2016 to $1.32 billion in 2018.
- Trefis estimates Dunkin’ Brands’ revenues to improve further by 4.3% to $1.38 billion in 2019 from $1.32 billion in 2018.
- Revenue improvement is expected to be driven primarily by the Dunkin’ Donuts US segment.
A separate interactive dashboard for Dunkin’ Brands provides an in-depth view of Dunkin’ Brands’ revenue trend and segment-wise revenue performance, along with forecast for 2019 and 2020.
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B] EPS to be below Consensus
- Dunkin’ Brands’ 2019 earnings per share (EPS) is expected to be $2.82 per Trefis analysis, lower than the consensus estimate of $3.13 per share.
- An increase in Total Revenue along with lower share count slightly offset by higher increase in expenses will drive the EPS improvement compared to 2018.
- As we forecast Dunkin’ Brands’ Revenue to improve and Expenses to increase further in 2019 (4.3% vs 4.9%), this will result in a fall in Dunkin’ Brands’ Net Income Margin figure from 17.4% in 2018 to 16.9% in 2019.
C] Stock Price Estimate in line with the Market Price
- A trailing P/E multiple of 28.4x looks appropriate for Dunkin’ Brands’ stock, which is higher than the current implied P/E multiple of 25.2x.
- As per Trefis, Dunkin’ Brands’ 2019 revenue will be just above the market expectations while earnings are expected to be lower than market expectations. This forecast works out to a fair value of $80 for Dunkin’ Brands’ stock, which is in line with its current market price of around $80.