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Dunkin Donuts (DNKN) SSS To Improve by End of 2016 - RBC

April 29, 2016 8:50 AM EDT
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Price: $106.48 -0.07%

Rating Summary:
    10 Buy, 31 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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RBC Capital analyst, David Palmer, said 1Q16 earnings showed better than expected sales for Dunkin Donuts USA (NASDAQ: DNKN) but 2Q16 SSS tends may decelerate sequentially due to diminished weather boost. That said, the analyst sees reasons for SSS improvement heading into 2H16 and 2017. No change to Outperform rating but the PT goes to $51 from $50.

Dunkin’s stock history has shown a high valuation sensitivity to its Dunkin Donuts USA SSS growth - with its peak multiple of ~28x coinciding with domestic Dunkin SSS levels of about 4%+. While 2Q Dunkin USA SSS growth may also be a near-zero, reasons are accumulating for improving domestic sales:

1) easing comparisons from the Dunkin K-cup launch in grocery channels in May 2015

2) a stronger innovation pipeline including the real launch of Smoothies

3) compelling national and regional value offerings for consumers that will help bolster 2H sales (e.g., $1.99 Frozen Coolatas)

4) an updated DD perks program with on-the-go mobile ordering can further boost same store traffic growth in 2017.

For an analyst ratings summary and ratings history on Dunkin' Brands click here. For more ratings news on Dunkin' Brands click here.

Shares of Dunkin' Brands closed at $47.47 yesterday.



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