Simple Dunkin Donuts (DNKN) Stock Analysis

   

After analyzing Under Armour in a previous post UAA Simple Stock Analysis and watching the stock price continue to drop :-(, I’m going to analyze another stock that I possess Dunkin Brands Group Inc. Many of you know them as Dunkin Donuts. By the way, I’m not an investment professional, do not have any formal investments certification or degree and apart from owning some shares and loving DNKN coffee am not affiliated with them in any other way. Now that we got that out of the way, let me take a deep breath and cross my fingers (wait never mind, I won’t be able to type) and begin!

 

What’s Good About DNKN?

DNKN is creeping up to a large cap status company (currently with a market cap of 4.9B), which means it’s established. DNKN pays a dividend of 32 cents per share which is a decent yield of about 2.37%. Actually the dividend increased in February 2017 payable on March 22, 2017. DNKN, as compared with Starbucks (SBUX) is heading in a positive direction. From the Google Finance – https://www.google.com/finance?q=NASDAQ%3ADNKN&ei=VJTJWIHVN4XTebCRrsAP chart below (click chart below to expand), DNKN has grown 17% more than SBUX (click to expand):

 

 

 

 

 

 

 
 
DNKN also pays a higher dividend than SBUX (.32 VS .25). In all fairness, however SBUX is a much larger company as a whole with over 80B in market capitalization. One may argue that SBUX may be just a bit more overpriced than DNKN since it’s P/E ratio is 27.97 while DNKN is 26.00. Revenue for DNKN has grown the past three fiscal years from 749M, to 811M to 829M per it’s 10K filing with the SEC (click to expand):

 

 

 

 

In terms of recent events and at the time of writing this post, I checked for the latest news on DNKN and found something positive! The company plans to expand in the south, particularly Alabama and Mississippi. It plans to build 17 stores as well as improve it’s current line of beverages, see the full article here: DNKN Plans Via Yahoo Finance. This tells me that DNKN is not done growing or maturing. It still has potential even in the US to become bigger and better.

 

What My Family and I Like About DNKN

There are a number of things. First of all, I like the taste the Dunkin Donuts coffee the best, it is smooth, tangy, flavorful, and has a nice after-taste as well. Next my family and I live in the suburbs and there are a lot more Dunkin Donuts than Starbucks. Third, it’s a lot cheaper than Starbucks too, a small size of Dunkin Donuts coffee is $1.59 and a Tall (what Starbucks calls small is $1.85 (Source: http://www.fastfoodmenuprices.com/).  I believe one of the reasons for this is the “coffee experience”. When you goto  a Starbucks, you smell more coffee aroma, see more comfortable seating, hear trendy coffee shop type music and if you have the time, can sit in a relaxing environment and enjoy your beverage. However, whenever I went to Starbucks, everyone in line just got their drink quickly and left. Everyone was always in a hurry, so no one was really taking advantage of the full “coffee experience” they are essentially paying for. The fine people at Motely Fool agree “In regards to experience, Starbucks offers a very clean, spacious, and comfortable atmosphere” (Comparison From Motley Fool) The food is cheaper too by the way. Third, for us there is something for everyone at Dunking Donuts, I love the coffee and egg and cheese croissant, my wife loves the hash browns (which are seasoned) and my son of course loves the chocolate donuts. All this comes to about less than $15.

 

Don’t Take My Word For It

Of course I have no formal education in the stock market, have never worked as a trader or investment adviser, so this is just my simple analysis based on information easily and publicly available. That being said, DNKN has an outreach of celebrities whom support the product as well. For example, possibly one of the greatest basketball players of all time, LeBron James has an endorsement deal with DNKN. Another one is winner of two Super Bowls, quarterback Eli Manning.

Despite being in business for almost 70 years DNKN is still hungry for growth, and I like that! It is expanding its brand not just in the Southern part of the United States as I mentioned earlier, but also in Asia and the Middle East. In addition, the company opened in first store in Cape Town South Africa in 2016! So go ahead folks stop by at a Dunkin Donuts for your favorite hot or cold beverage….and while you’re enjoying it, think about whether or not this company is an appropriate investment for you.

 

 

Simple Money Man (SMM)

7 Comments

  1. Great post. My husband LOVES Dunkin Donuts. I recently wrote a post about budgeting in which we discovered he was drinking over $150 worth of Dunkin Donuts a month (good for your shares). After seeing that he cut back a little, but still goes every morning on his way to work. Dunkin is a good company and I agree with your analysis above. The only thing to be mindful of is their debt load. While they have been growing their store base and expanding internationally as you noted, they have also increased the amount of debt on their balance sheet. As long as they continue to grow and their earnings grow commensurate with their store growth the debt shouldn’t be to much of a burden.

    • Maybe it’s cheaper if he buys Dunkin coffee at the supermarket and drinks it at home (win win :-)). I agree with the debt and hopefully the payment terms are favorable and given their expansion goals will work out well for them.

  2. I lived in New England for grad school, where I was first introduced to Dunkin Donuts. I love their bagel sandwiches a bit too much! 🙂

    It’s a great company with a smart expansion plan–I always love going into an airport and seeing a DD there instead of Starbucks. Just sayin’ 🙂

    • I went to Dallas a few months back traveling out of Baltimore and there was a DD at the terminal. It was great since it was a morning flight so I grabbed a cup using my DD card (man I sound so commercial-ish lol).

  3. I have to admit that I don’t like Dunkin Donuts very much. I feel like I’m in the minority. I don’t like coffee so I’m sure that’s my first strike. I also don’t like their donuts. I think they are a bit dry. Especially when compared to Krispy Kreme. So unfortunately since I wouldn’t buy the product I have to pass on Dunkin 🙂

    • Totally get that, if you don’t like the product, it is VERY difficult to see the positives and convince others about it. Krispy Kreme donuts are amazing when they are hot and fresh. The closest one to us is about 20 minutes away though 🙁

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