Dunkin’ Brands Group, Inc. – Value Analysis (NASDAQ:DNKN) : June 20, 2017

Capitalcube gives Dunkin’ Brands Group, Inc. a score of 53.

Our analysis is based on comparing Dunkin’ Brands Group, Inc. with the following peers – Wendy’s Company, Panera Bread Company Class A, Starbucks Corporation, McDonald’s Corporation, J. M. Smucker Company and Dean Foods Company (WEN-US, PNRA-US, SBUX-US, MCD-US, SJM-US and DF-US).

Investment Outlook

Dunkin’ Brands Group, Inc. has a fundamental score of 53 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • Dunkin’ Brands Group, Inc. currently has a negative book value but its current Price/Assets ratio of 1.66 is about median among its peers.
  • DNKN-US‘s book value of equity is not positive and suggests that that it is not meaningful to analyze its ROE versus P/E in order to determine whether the company has an operating or growth advantage.
  • DNKN-US‘s relatively high profit margins are burdened by relative asset inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • DNKN-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • DNKN-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • DNKN-US seems to be constrained by the current level of debt.

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Leverage & Liquidity

DNKN-US is debt-constrained.

  • With debt at a relatively high 34.38% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 27.27%), and interest coverage level of 3.93x, DNKN-US seems debt-constrained.
  • All 6 peers for the company have an outstanding debt balance.

DNKN-US has maintained its Some Capacity profile from the recent year-end.

  • DNKN-US‘s interest coverage is upward trending and is now similar to its five-year average interest coverage of 3.91x.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (3.93x) and the peer median (7.62x).
  • DNKN-US‘s debt-EV continues to trend downward and is now similar to its five-year average debt-EV of 34.26%.
  • While its debt-EV decreased to 34.38% from 35.82% (in 2016), its peer median increased during this period to 27.27% from 26.02%.
  • Relative to peers, debt-EV fell 2.69 percentage points.

Access the detailed analysis for Dunkin’ Brands Group, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Wendy’s Company 45.7 2.1 2.96 8.13
Panera Bread Company Class A 7.84 0.79 28.3 75.91
Starbucks Corporation 4.61 1.23 40.83 115.57
McDonald’s Corporation 20.86 1.83 8.94 22.3
J. M. Smucker Company N/A 0.9 7.62 19.64
Dean Foods Company 33.69 1.22 3.11 33.59
Dunkin’ Brands Group, Inc. 34.38 1.61 3.93 9.95
Peer Median 27.27 1.23 7.62 22.3
Best In Class 4.61 2.1 40.83 115.57

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Company Profile

Dunkin’ Brands Group, Inc. operates as a franchisor of quick service restaurants, which engages in the service of hot and cold coffee, baked goods, and ice cream. It operates through the following segments: Dunkin’ Donuts U.S., Dunkin’ Donuts International, Baskin-Robbins International, and Baskin-Robbins U.S. The company was founded on November 22, 2005 and is headquartered in Canton, MA.


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