Why shares in Dunkin’ Brands sank after earnings release
Why solid 3Q14 for Dunkin' Brands could have been better (Part 10 of 11)
Shares plunged
Dunkin’ Brands Group, Inc. (DNKN) reported its earnings on October 23, 2014, before the market opened. Shares began trading at $44.2. This was down 5.5% from the previous day’s close of $46.79. The day’s respective high and low were $45.39 and $43.65.
Share volume was ~4.9 million compared to the 50-day average daily volume of ~1.2 million shares. Dunkin’ Brands closed down 6% at $44 from the previous day’s close, according to NASDAQ.
Although the revenues and margins increased, the company had disappointing same-store sales overall. This is what led its shares to drop on the day earnings were announced.
Upgrades and downgrades
On October 24, JP Morgan maintained its neutral rating, but lowered the price target to $49 from $50
On October 23, Jefferies also maintained its hold rating with a price target of $47
As of October 24, 13 analysts had a buy rating on the company, 12 had a hold rating, and one had a sell rating with a consensus target price of $49
4Q14 estimates
The Wall Street analysts’ consensus estimates for Dunkin’ Brands in 4Q14 are as follows:
Adjusted earnings per share – $0.47
Revenues – $193 million
Operating profits – $96 million
Adjusted net income – $50 million
2Q earnings should be announced on February 6, 2015
Next, we’ll review Dunkin’ Brands’ year-to-date returns, and compare these to its competitors including Starbucks Corporation (SBUX), Yum! Brands, Inc. (YUM), and McDonald’s Corporation(MCD). All of these companies are included in the exchange-traded fund, the Consumer Discretionary Select Sector SPDR Fund (XLY).
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