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Dunkin' Brands Group, Inc. reported solid results in second-quarter 2018, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Notably, the bottom line came ahead of the consensus mark for the third straight quarter.
Adjusted earnings of 77 cents per share surpassed the consensus estimate of 74 cents by 4.1%. The bottom line also increased 30.5% on a year-over-year basis. The upside was driven by rise in net income along with a decrease in shares outstanding owing to repurchase since the first quarter of 2017.
Revenues were up 4.9% year over year to $350.6 million, which exceeded the consensus mark of $342 million. The top line increased primarily owing to rise in royalty income from system-wide sales growth and an increase in advertising fees.
The company’s global system-wide sales rose 4.4% from the prior-year quarter compared with 5.1% growth in the first quarter of 2018. System-wide sales were favored by global store development and Baskin-Robbins International comps growth.
Following the quarterly numbers, the company’s shares witnessed a marginal gain of 0.4% yesterday. In a year’s time, the stock has surged 35%, outperforming the industry’s 3.8% rise.
Dunkin' Brands Group, Inc. Price, Consensus and EPS Surprise
Dunkin' Brands operates through its Dunkin’ Donuts and Baskin-Robbins brands.
Dunkin' Donuts U.S. reported revenues of $157.4 million, which reflects an increase of 4.2% from the prior-year quarter number. The upside can be attributed to higher royalty income, franchise fees and other revenues. Comps also inched up 1.4% in the quarter owing to increase in average ticket, which was partially overshadowed by decline in traffic.
Dunkin’ Donuts International division reported revenues of $5.3 million, mirroring an increase of 14% from the prior-year quarter. The improvement was primarily driven by rise in royalty income. Additionally, comps increased 4% compared with 2.1% gain in the preceding quarter.
Baskin-Robbins U.S. revenues were down 1.1% from the prior-year quarter to $14.1 million due to a decrease in royalty income, and sales of ice cream and other products, offset by an increase in franchise fees. Comps dipped 0.4% compared with 1% decline in the year-ago quarter.
Baskin-Robbins International division revenues came in at $34 million, almost flat year over year. Increase in royalty income and rental income was overshadowed by decline in franchise fees and sales of ice cream and other products. Comps declined 2.5% against an improvement of 10% in the preceding quarter.
Operating Performance
Adjusted operating income rose 6.8% from the year-ago quarter to $199.8 million mainly owing to an increase in royalty income and a reduction of general and administrative expenses. The upside was partly offset by a decrease in net margin on ice cream primarily due to an increase in commodity costs. Adjusted operating income margin expanded 60 basis points to 34.2%.
Balance Sheet
Dunkin' Brands exited the second quarter with cash and cash equivalents of $367.9 million, compared with $1 billion at the end of 2017. Restricted cash totaled $85 million, down from $94 million in the previous year. Accounts receivables summed $128.9 million, down from $121.8 million in the prior year. Long-term debt was approximately $3 billion.
2018 Guidance
Dunkin’ Brands expects adjusted earnings in the range of $2.68-$2.72 per share (down from the previously guided range of $2.69-$2.74). The Zacks Consensus Estimate for 2018 earnings is pegged at $2.75.
The company continues to expect low-to-mid single-digit revenue growth, with Dunkin’ Donuts U.S. comps improving 1%. It also expects low-single digit comparable sales growth for Baskin-Robbins U.S. Moreover, operating and adjusted operating income growth is anticipated in mid-single digit compared with earlier guided range of mid-to-high single digit.
Dave & Buster's Entertainment has an impressive long-term earnings growth rate of 14.8%.
BJ's Restaurants reported better-than-expected earnings in the trailing two quarters.
Chipotle Mexican Grill has an impressive long-term earnings growth rate of 17%.
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Dunkin' Brands (DNKN) Q2 Earnings & Revenues Beat Estimates
Dunkin' Brands Group, Inc. reported solid results in second-quarter 2018, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Notably, the bottom line came ahead of the consensus mark for the third straight quarter.
Adjusted earnings of 77 cents per share surpassed the consensus estimate of 74 cents by 4.1%. The bottom line also increased 30.5% on a year-over-year basis. The upside was driven by rise in net income along with a decrease in shares outstanding owing to repurchase since the first quarter of 2017.
Revenues were up 4.9% year over year to $350.6 million, which exceeded the consensus mark of $342 million. The top line increased primarily owing to rise in royalty income from system-wide sales growth and an increase in advertising fees.
The company’s global system-wide sales rose 4.4% from the prior-year quarter compared with 5.1% growth in the first quarter of 2018. System-wide sales were favored by global store development and Baskin-Robbins International comps growth.
Following the quarterly numbers, the company’s shares witnessed a marginal gain of 0.4% yesterday. In a year’s time, the stock has surged 35%, outperforming the industry’s 3.8% rise.
Dunkin' Brands Group, Inc. Price, Consensus and EPS Surprise
Dunkin' Brands Group, Inc. Price, Consensus and EPS Surprise | Dunkin' Brands Group, Inc. Quote
Segmental Performance
Dunkin' Brands operates through its Dunkin’ Donuts and Baskin-Robbins brands.
Dunkin' Donuts U.S. reported revenues of $157.4 million, which reflects an increase of 4.2% from the prior-year quarter number. The upside can be attributed to higher royalty income, franchise fees and other revenues. Comps also inched up 1.4% in the quarter owing to increase in average ticket, which was partially overshadowed by decline in traffic.
Dunkin’ Donuts International division reported revenues of $5.3 million, mirroring an increase of 14% from the prior-year quarter. The improvement was primarily driven by rise in royalty income. Additionally, comps increased 4% compared with 2.1% gain in the preceding quarter.
Baskin-Robbins U.S. revenues were down 1.1% from the prior-year quarter to $14.1 million due to a decrease in royalty income, and sales of ice cream and other products, offset by an increase in franchise fees. Comps dipped 0.4% compared with 1% decline in the year-ago quarter.
Baskin-Robbins International division revenues came in at $34 million, almost flat year over year. Increase in royalty income and rental income was overshadowed by decline in franchise fees and sales of ice cream and other products. Comps declined 2.5% against an improvement of 10% in the preceding quarter.
Operating Performance
Adjusted operating income rose 6.8% from the year-ago quarter to $199.8 million mainly owing to an increase in royalty income and a reduction of general and administrative expenses. The upside was partly offset by a decrease in net margin on ice cream primarily due to an increase in commodity costs. Adjusted operating income margin expanded 60 basis points to 34.2%.
Balance Sheet
Dunkin' Brands exited the second quarter with cash and cash equivalents of $367.9 million, compared with $1 billion at the end of 2017. Restricted cash totaled $85 million, down from $94 million in the previous year. Accounts receivables summed $128.9 million, down from $121.8 million in the prior year. Long-term debt was approximately $3 billion.
2018 Guidance
Dunkin’ Brands expects adjusted earnings in the range of $2.68-$2.72 per share (down from the previously guided range of $2.69-$2.74). The Zacks Consensus Estimate for 2018 earnings is pegged at $2.75.
The company continues to expect low-to-mid single-digit revenue growth, with Dunkin’ Donuts U.S. comps improving 1%. It also expects low-single digit comparable sales growth for Baskin-Robbins U.S. Moreover, operating and adjusted operating income growth is anticipated in mid-single digit compared with earlier guided range of mid-to-high single digit.
Zacks Rank & Peer Releases
Dunkin’ Brands carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dave & Buster's Entertainment has an impressive long-term earnings growth rate of 14.8%.
BJ's Restaurants reported better-than-expected earnings in the trailing two quarters.
Chipotle Mexican Grill has an impressive long-term earnings growth rate of 17%.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>