RBC Capital Maintains Dunkin' Brands (DNKN) at 'Sector Perform' Following Q3 Results
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RBC Capital affirms Dunkin' Brands Group (Nasdaq: DNKN) at Sector Perform with a price target of $51 after the company reported Q3 results today.
The firm commented today:
- EPS and Dunkin' US SSS growth ahead of consensus: Adjusted EPS was $0.60 (+16% YOY; RBCe $0.59; cons' $0.58). 2Q same store sales (SSS) growth for Dunkin' US segment (83% of profit) grew 2%, slightly better than our 1.5% and consensus' 1.3%, driven by increased average ticket offset by a decline in traffic. For 2016, the company continues to expect adjusted EPS between $2.20-$2.22 (RBCe $2.20) and is based on total revenue growth of 1%-2% (prior 3%-5%), with at least half of the growth (100bps) attributed to the 53rd week, adjusted operating growth of 8%-10%, and a diluted share count of 93 mm. The company's slower revenue growth outlook is due to weaker that expected sales of ice cream products in the company's Baskin' Robbins International segment, the sale of the 17 remaining company-owned stores during 3Q, and as Dunkin' US development is likely to be at the low end of the previous 430 to 460 net new unit range. Offsetting slower revenue growth is slightly higher income related to the company's Japan JV.
- Dunkin's other segments reported SSS declines: Baskin-Robbins US segment (8% of profit) SSS declined 0.9% (vs. RBCe 1% and cons' 0.5%); Dunkin' Donuts International segment (1% of profit) SSS declined 1.4% (vs. RBCe +1% and cons' -1.6%); and Baskin-Robbins International segment (8% of profit) SSS decline 2.9% (vs. RBCe +1% and cons' -3.5%).
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