Why Dunkin’ Donuts is an investor’s breakfast of champions
With Wall Street expecting $.40 in earnings, Dunkin Brands, the purveyor of some of the most delicious doughnuts (and relatively good coffee) in the US surprised the market with fourth-quarter earnings of $.43 as well as a top line of $183.2 million (the consensus was $178 million).
Not only did the brand boost its quarterly dividend from $.19 to $.23 per share, it’s expected that the revenues will grow from 6% to 8% this year. While their apple crumb donut isn’t exactly what you would call “health food” at 490 calories, Dunkin Brands , the parent company of Dunkin’ Donuts and Baskin-Robbins, is certainly having a run of healthy sales growth as of late.
Even better for investors is the fact that, while about 30% of Dunkin’ Donuts 2800 stores are not located in the US, the vast majority of those that are within US borders are on the East coast, giving the brand an awful lot of room to keep expanding.
Gina Sanchez, founder of Chantico Global, says that “I think that there is incredible growth potential,” saying that while Dunkin’ Donuts rival McDonald’s had same-store losses in the fourth quarter, Dunkin’ Donuts same-store sales during the same time period were positive. Sanchez further added that “If you look at their expansion plans, they have over 7300 stores across the nation. Only 190 one of those stores are in the West. They are planning 5000 new store openings in the West, 1000 of which will be in California. That’s incredible opportunity.”
Thursday’s jump in the stock market to just over $50 per share after their earnings announcement meant a break above a key technical level, according to the managing partner of Belpointe Alternative Investments, Jeff Tomasulo. “It’s actually looking really good,” he said about their stock. “For the last two-years, it really hasn’t broken below that 20-week moving average. Then, for the last two months, we saw it in a trading range between $46 and $49.”
He recommended that investors track whether or not the stock can hold above the $46 to $49 trading range, as well as remain above its 20 week moving average which is currently around $47. “Those are some really good points to use,” he added.
So if you’re looking to add something sweet to your portfolio (and you don’t mind that it comes with a few extra calories),adding Dunkin Brands certainly looks like a palatable idea. Whether or not you’ll need a coffee with that is up to you.
Filed under: Investing
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