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Dunkin' Brands Group, Inc. reported mixed results for the second quarter of 2019, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Notably, the reported quarter marked the seventh straight quarter of an earnings beat.
The company’s adjusted earnings of 86 cents per share surpassed the consensus estimate of 82 cents by 4.9%. The bottom line also improved 11.7% on a year-over-year basis, driven by rise in net income.
Revenues were up 2.5% year over year to $359.3 million but missed the consensus mark of $361 million. The top line improved, primarily owing to rise in royalty income from higher system-wide sales of Dunkin’ U.S., and rental income growth. Revenues were partially offset by a decline in advertising fees and related income.
The company’s global system-wide sales rose 3.8% from the prior-year quarter. Its system-wide sales were favored by global store development, and comps growth at Dunkin’ U.S. and Dunkin’ International.
Segmental Performance
Dunkin' Brands operates through Dunkin’ and Baskin-Robbins brands.
Dunkin' U.S. reported revenues of $166.6 million, which reflect an improvement of 5.8% from the prior-year quarter. This upside can be attributed to higher royalty income, driven by system-wide sales growth and increase in rental income, offset by a decrease in franchise fees. Comps also grew 1.7% in the second quarter of 2019, owing to rise in average ticket, which was partially offset by a decrease in traffic.
Dunkin’ International division reported revenues of $7.5 million, mirroring gain of 42.1% from the prior-year quarter. The improvement was primarily backed by rise in royalty income and franchise fees. Additionally, comps rose 5.6% compared with 4% gain in the year-ago quarter.
Baskin-Robbins U.S. revenues grew 1.3% from the prior-year quarter to $10.3 million, owing to rise in ice cream sales and rental income, offset by a decrease in royalty income, driven by a systemwide sales decline as well as a decrease in other revenues. Comps fell 1.4% compared with a 0.4% decline recorded in the year-ago quarter.
Baskin-Robbins International division revenues were $32.7 million, marking a year-over-year decrease of 3.9% due to a decline in sales of ice cream and other products, and low royalty income, offset by franchise fees. However, comps grew 3.2% against a fall of 2.5% in the year-ago quarter.
Dunkin' Brands Group, Inc. Price, Consensus and EPS Surprise
Adjusted operating income rose 6.2% from the year-ago quarter to $127.3 million, mainly owing to increase in royalty income and other operating income. Adjusted operating income margin expanded 120 basis points to 35.4%.
Balance Sheet
Dunkin' Brands exited the second quarter of 2019 with cash and cash equivalents of $474.3 million compared with $517.6 million at the end of 2018. Restricted cash totaled $88.6 million, up from $79 million as of Dec 29, 2018. Long-term debt was approximately $3 billion.
2019 Guidance
The company expects adjusted earnings of $3.02-$3.05 per share, up from $2.94-$2.99 per share mentioned earlier. The Zacks Consensus Estimate for its earnings in 2019 is pegged at $3, in line with the mid-point of Dunkin' Brands’ guided range.
The company expects low to mid-single-digit revenue growth, with Dunkin’ U.S. and Baskin-Robbins U.S’ comps improving in a low-single digit. It expects to open at the low end of 200-250 net new Dunkin' U.S. units.
Darden (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, whereas revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. Moreover, the bottom line grew 26.6% year over year on higher revenues.
Domino’s (DPZ - Free Report) reported mixed second-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Its adjusted earnings were $2.19 per share, which outpaced the Zacks Consensus Estimate of $2.00. The metric also grew 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.
Chipotle (CMG - Free Report) reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter, backed by rise in revenues and strong operating margins.
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Dunkin' Brands (DNKN) Beats Q2 Earnings Estimates, Ups View
Dunkin' Brands Group, Inc. reported mixed results for the second quarter of 2019, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Notably, the reported quarter marked the seventh straight quarter of an earnings beat.
The company’s adjusted earnings of 86 cents per share surpassed the consensus estimate of 82 cents by 4.9%. The bottom line also improved 11.7% on a year-over-year basis, driven by rise in net income.
Revenues were up 2.5% year over year to $359.3 million but missed the consensus mark of $361 million. The top line improved, primarily owing to rise in royalty income from higher system-wide sales of Dunkin’ U.S., and rental income growth. Revenues were partially offset by a decline in advertising fees and related income.
The company’s global system-wide sales rose 3.8% from the prior-year quarter. Its system-wide sales were favored by global store development, and comps growth at Dunkin’ U.S. and Dunkin’ International.
Segmental Performance
Dunkin' Brands operates through Dunkin’ and Baskin-Robbins brands.
Dunkin' U.S. reported revenues of $166.6 million, which reflect an improvement of 5.8% from the prior-year quarter. This upside can be attributed to higher royalty income, driven by system-wide sales growth and increase in rental income, offset by a decrease in franchise fees. Comps also grew 1.7% in the second quarter of 2019, owing to rise in average ticket, which was partially offset by a decrease in traffic.
Dunkin’ International division reported revenues of $7.5 million, mirroring gain of 42.1% from the prior-year quarter. The improvement was primarily backed by rise in royalty income and franchise fees. Additionally, comps rose 5.6% compared with 4% gain in the year-ago quarter.
Baskin-Robbins U.S. revenues grew 1.3% from the prior-year quarter to $10.3 million, owing to rise in ice cream sales and rental income, offset by a decrease in royalty income, driven by a systemwide sales decline as well as a decrease in other revenues. Comps fell 1.4% compared with a 0.4% decline recorded in the year-ago quarter.
Baskin-Robbins International division revenues were $32.7 million, marking a year-over-year decrease of 3.9% due to a decline in sales of ice cream and other products, and low royalty income, offset by franchise fees. However, comps grew 3.2% against a fall of 2.5% in the year-ago quarter.
Dunkin' Brands Group, Inc. Price, Consensus and EPS Surprise
Dunkin' Brands Group, Inc. price-consensus-eps-surprise-chart | Dunkin' Brands Group, Inc. Quote
Operating Performance
Adjusted operating income rose 6.2% from the year-ago quarter to $127.3 million, mainly owing to increase in royalty income and other operating income. Adjusted operating income margin expanded 120 basis points to 35.4%.
Balance Sheet
Dunkin' Brands exited the second quarter of 2019 with cash and cash equivalents of $474.3 million compared with $517.6 million at the end of 2018. Restricted cash totaled $88.6 million, up from $79 million as of Dec 29, 2018. Long-term debt was approximately $3 billion.
2019 Guidance
The company expects adjusted earnings of $3.02-$3.05 per share, up from $2.94-$2.99 per share mentioned earlier. The Zacks Consensus Estimate for its earnings in 2019 is pegged at $3, in line with the mid-point of Dunkin' Brands’ guided range.
The company expects low to mid-single-digit revenue growth, with Dunkin’ U.S. and Baskin-Robbins U.S’ comps improving in a low-single digit. It expects to open at the low end of 200-250 net new Dunkin' U.S. units.
Zacks Rank & Stocks to Consider
Dunkin’ Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Darden (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, whereas revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. Moreover, the bottom line grew 26.6% year over year on higher revenues.
Domino’s (DPZ - Free Report) reported mixed second-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Its adjusted earnings were $2.19 per share, which outpaced the Zacks Consensus Estimate of $2.00. The metric also grew 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.
Chipotle (CMG - Free Report) reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter, backed by rise in revenues and strong operating margins.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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