Dunkin' Brands Group, Inc. reported fourth-quarter fiscal 2019 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line also grew year over year, buoyed by solid segmental growth and decline in G&A expenses.
However, the company provided weak fiscal 2020 guidance. Dunkin’ Brands’ projects $60-million high-volume brewer investment that will reflect in the operating income growth, which is anticipated at the low end of the guidance. We expect this to have impacted investors’ sentiments as shares of the company dipped 2.8% on Feb 6, post earnings release.
Its adjusted earnings of 73 cents per share surpassed the consensus mark of 70 cents by 4.3%. The bottom line also improved 7.4% on a year-over-year basis, driven by increase in royalty income and reduced expense, partially offset by lower franchise fees.
Revenues were up 5.1% year over year to $335.9 million, which beat the consensus mark of $335 million by 0.3%. The top-line improvement can be attributed to a rise in system-wide sales at Dunkin’ U.S. and rental income growth. The revenue growth was partially offset by a decline in franchise fees as well as sales of ice cream and other products.
Dunkin' Brands Group, Inc. Price, Consensus and EPS Surprise
Dunkin' Brands’ expects to open 200-250 net new Dunkin' U.S. units, which will contribute more than $140 million to its system-wide sales. The company expects low-single digit comps growth for Dunkin' U.S. as well as for Baskin-Robbins U.S.
The company expects to close approximately 25 net units of Baskin-Robbins U.S. franchisees, owing to the strategic initiative to optimize its store base. It expects low to mid-single-digit revenue growth.
Fiscal 2020 operating and adjusted operating income growth is expected at mid-single digit. General and administrative expenses are likely to grow low-single digit.
Full year effective tax rate is estimated at approximately 27% and net interest expense of nearly $121 million. Also, it projects capital expenditures of roughly $40 million.
Adjusted earnings per share are expected in the range of $3.16-$3.21.
Meanwhile, the company reiterates its previously announced long-term targets (through fiscal 2021).
Zacks Rank & Other Key Picks
Dunkin' Brands’ currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Few top-ranked stocks from the same space include Denny's Corporation DENN, Ruth's Hospitality Group, Inc. RUTH and Brinker International, Inc. EAT. Denny's and Ruth's Hospitality sport a Zacks Rank #1, while Brinker International carries a Zacks Rank #2.
Denny’s has four-quarter positive earnings surprise of 19.5%, on average
Ruth's Hospitality has three-five year expected earnings per share growth rate of 20%.
Brinker International 2020 earnings are expected to rise 9.2%
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