A week ago, Dunkin' Brands Group, Inc. (NASDAQ:DNKN) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Dunkin' Brands Group beat earnings, with revenues hitting US$362m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 16%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Dunkin' Brands Group after the latest results.
Following the latest results, Dunkin' Brands Group's 21 analysts are now forecasting revenues of US$1.38b in 2021. This would be an okay 5.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to grow 15% to US$3.07. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.38b and earnings per share (EPS) of US$3.01 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 16% to US$89.82despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Dunkin' Brands Group's earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Dunkin' Brands Group, with the most bullish analyst valuing it at US$107 and the most bearish at US$69.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Dunkin' Brands Group's revenue growth is expected to slow, with forecast 5.5% increase next year well below the historical 11%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 22% next year. Factoring in the forecast slowdown in growth, it seems obvious that Dunkin' Brands Group is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Dunkin' Brands Group analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that Dunkin' Brands Group is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.