It's been a mediocre week for Dunkin' Brands Group, Inc. (NASDAQ:DNKN) shareholders, with the stock dropping 13% to US$66.53 in the week since its latest full-year results. Results were roughly in line with estimates, with revenues of US$1.4b and statutory earnings per share of US$2.89. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Dunkin' Brands Group after the latest results.
Following the latest results, Dunkin' Brands Group's 23 analysts are now forecasting revenues of US$1.41b in 2020. This would be a satisfactory 3.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 5.9% to US$3.10. In the lead-up to this report, analysts had been modelling revenues of US$1.41b and earnings per share (EPS) of US$3.13 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$79.33. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Dunkin' Brands Group, with the most bullish analyst valuing it at US$88.00 and the most bearish at US$71.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to Dunkin' Brands Group's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Dunkin' Brands Group's revenue growth will slow down substantially, with revenues next year expected to grow 3.1%, compared to a historical growth rate of 14% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 8.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Dunkin' Brands Group.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$79.33, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Dunkin' Brands Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Dunkin' Brands Group analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Dunkin' Brands Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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