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Dunkin' Brands Group, Inc. reported mixed results in the second quarter of 2016, wherein the bottom line outpaced the Zacks Consensus Estimate while the top line lagged the same.
Earnings and Revenue Discussion
Adjusted earnings of 57 cents per share beat the Zacks Consensus Estimate of 56 cents by 1.8% and increased 14% year over year mainly due to decrease in shares outstanding.
The quick service restaurant operator’s revenues in the quarter increased 2.3% year over year to $216.3 million. The improvement was primarily driven by increased royalty income coupled with an increase in other revenues, primarily buoyed by higher license fee recognized in connection with the Dunkin' K-Cup pod licensing agreement and an increase in transfer fee income.
These increases were however offset by a decrease in sales at company-operated restaurants as well as dwindling ice cream and other products sales. Revenues, thus, missed the Zacks Consensus Estimate of $220 million by 1.7%.
Inside the Headline Numbers
Dunkin' Brands operates through its Dunkin’ Donuts and Baskin-Robbins brands.
System-wide sales increased 3.8%, comparing unfavorably with 4.4% growth in the prior quarter.
Dunkin’ Donuts
Dunkin' Donuts U.S. reported revenues of $153.7 million, reflecting a rise of 2.6% over the prior-year quarter. The increase was mainly attributable to higher royalty income as well as an increase in other revenues.
Comps increased 0.5% in the Dunkin Donuts U.S. division, comparing unfavorably with 2.8% growth in the prior-year quarter and 2% growth in the preceding quarter.
Comps at Dunkin’ Donuts International division declined 3.1%, a wider plunge than 0.1% and 2.3% in the year-ago comparable period and prior quarter, respectively.
Baskin Robbins
Baskin-Robbins revenues were down 2.9% from the prior-year quarter to $13.7 million mainly due to fall in sales of ice cream and other products, somewhat offset by an increase in royalty income and other revenues.
Comps increased 0.6% in the Baskin Robbins U.S. division, weaker than 4.1% growth in the year-ago quarter and 5% growth in the prior quarter.
However, at Baskin Robbins International division, comps declined 6.6%, wider than the 2.5% slump in the prior-year quarter but better than the 8.2% fall in the prior quarter.
Operating Margin
Adjusted operating income rose 8.1% from the prior-year quarter to $111.3 million mainly due to the increase in royalty income and other revenues, offset by the decrease in net margin on ice cream and other products in international markets. Meanwhile, adjusted operating income margin rose 280 basis points to 51.5%.
Store Update
In the second quarter, Dunkin' Brands opened 198 new restaurants worldwide. These include 73 Dunkin' Donuts U.S. locations and 35 Dunkin' Donuts international outlets. There were 78 new openings under Baskin-Robbins International and 12 under Baskin-Robbins U.S. division. Additionally, Dunkin' Donuts U.S. franchisees remodeled 107 restaurants and Baskin-Robbins U.S. franchisees renovated 36 outlets during the quarter.
For full-year 2016, Dunkin’ Brands maintains adjusted earnings per share projections in the range of $2.20–$2.22 and adjusted operating income growth in the band of 8%–10%. Notably, the adjusted earnings per share guidance is based on a period of 53 weeks. The 53rd week is expected to add approximately 3 cents to 2016 earnings.
However, Dunkin’ Brands now expects revenue growth between 3% to 5% (earlier 4%--6%) taking into account the sale of company-owned stores in the second quarter as well as projected sales in 2016.
Dunkin' Donuts U.S. comps are maintained in the range of flat to up 2%. Meanwhile, Baskin-Robbins U.S. comps growth is likely to be within 1% to 3%.
Zacks Rank & Stocks to Consider
Dunkin’ Brands has a Zacks Rank #3 (Hold). Better-ranked restaurant stocks are Carrols Restaurant Group, Inc. (TAST - Free Report) , Famous Dave's of America Inc. (DAVE - Free Report) and Buffalo Wild Wings Inc. . All the three stocks carry a Zacks Rank #2 (Buy).
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Dunkin' Brands (DNKN) Beats Q2 Earnings, Misses Revenues
Dunkin' Brands Group, Inc. reported mixed results in the second quarter of 2016, wherein the bottom line outpaced the Zacks Consensus Estimate while the top line lagged the same.
Earnings and Revenue Discussion
Adjusted earnings of 57 cents per share beat the Zacks Consensus Estimate of 56 cents by 1.8% and increased 14% year over year mainly due to decrease in shares outstanding.
The quick service restaurant operator’s revenues in the quarter increased 2.3% year over year to $216.3 million. The improvement was primarily driven by increased royalty income coupled with an increase in other revenues, primarily buoyed by higher license fee recognized in connection with the Dunkin' K-Cup pod licensing agreement and an increase in transfer fee income.
These increases were however offset by a decrease in sales at company-operated restaurants as well as dwindling ice cream and other products sales. Revenues, thus, missed the Zacks Consensus Estimate of $220 million by 1.7%.
Inside the Headline Numbers
Dunkin' Brands operates through its Dunkin’ Donuts and Baskin-Robbins brands.
System-wide sales increased 3.8%, comparing unfavorably with 4.4% growth in the prior quarter.
Dunkin’ Donuts
Dunkin' Donuts U.S. reported revenues of $153.7 million, reflecting a rise of 2.6% over the prior-year quarter. The increase was mainly attributable to higher royalty income as well as an increase in other revenues.
Comps increased 0.5% in the Dunkin Donuts U.S. division, comparing unfavorably with 2.8% growth in the prior-year quarter and 2% growth in the preceding quarter.
Comps at Dunkin’ Donuts International division declined 3.1%, a wider plunge than 0.1% and 2.3% in the year-ago comparable period and prior quarter, respectively.
Baskin Robbins
Baskin-Robbins revenues were down 2.9% from the prior-year quarter to $13.7 million mainly due to fall in sales of ice cream and other products, somewhat offset by an increase in royalty income and other revenues.
Comps increased 0.6% in the Baskin Robbins U.S. division, weaker than 4.1% growth in the year-ago quarter and 5% growth in the prior quarter.
However, at Baskin Robbins International division, comps declined 6.6%, wider than the 2.5% slump in the prior-year quarter but better than the 8.2% fall in the prior quarter.
Operating Margin
Adjusted operating income rose 8.1% from the prior-year quarter to $111.3 million mainly due to the increase in royalty income and other revenues, offset by the decrease in net margin on ice cream and other products in international markets. Meanwhile, adjusted operating income margin rose 280 basis points to 51.5%.
Store Update
In the second quarter, Dunkin' Brands opened 198 new restaurants worldwide. These include 73 Dunkin' Donuts U.S. locations and 35 Dunkin' Donuts international outlets. There were 78 new openings under Baskin-Robbins International and 12 under Baskin-Robbins U.S. division. Additionally, Dunkin' Donuts U.S. franchisees remodeled 107 restaurants and Baskin-Robbins U.S. franchisees renovated 36 outlets during the quarter.
DUNKIN BRANDS Price, Consensus and EPS Surprise
DUNKIN BRANDS Price, Consensus and EPS Surprise | DUNKIN BRANDS Quote
Guidance for 2016
For full-year 2016, Dunkin’ Brands maintains adjusted earnings per share projections in the range of $2.20–$2.22 and adjusted operating income growth in the band of 8%–10%. Notably, the adjusted earnings per share guidance is based on a period of 53 weeks. The 53rd week is expected to add approximately 3 cents to 2016 earnings.
However, Dunkin’ Brands now expects revenue growth between 3% to 5% (earlier 4%--6%) taking into account the sale of company-owned stores in the second quarter as well as projected sales in 2016.
Dunkin' Donuts U.S. comps are maintained in the range of flat to up 2%. Meanwhile, Baskin-Robbins U.S. comps growth is likely to be within 1% to 3%.
Zacks Rank & Stocks to Consider
Dunkin’ Brands has a Zacks Rank #3 (Hold). Better-ranked restaurant stocks are Carrols Restaurant Group, Inc. (TAST - Free Report) , Famous Dave's of America Inc. (DAVE - Free Report) and Buffalo Wild Wings Inc. . All the three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>