Is Dunkin' Brands (DNKN) the Short of the Year in Restaurants?

Dunkin' Brands (NASDAQ: DNKN) recent weakness is continuing Tuesday after Longbow Research analyst Alton Stump called it his top short idea for 2016 in a note dated January 4, 2016. Shares are down 1.8% Tuesday after losing 3.8% Monday.

Stump said they are concerned Dunkin' Brands will either have to slow new store builds in core markets in 2016 or place incremental pressure on same-store sales in the event DNKN continues to overbuild in core regions.

In addition, DNKN franchisees are concerned the plan to take far less rate pricing this year in comparison to 2015 could drive a meaningful deceleration in overall same-store sales growth. They note DNKN has experienced the most notable negative impact from McDonald's recent recovery per their latest channel checks.

Meanwhile, the firm named Texas Roadhouse (NASDAQ: TXRH) their top long idea. The analyst sees 0.13-0.19 of EPS upside from lower commodity costs and another $0.07-0.14 of upside from better than expected comp growth could drive TXRH’s EPS into a $1.85+ range in 2016, well ahead of the firm's current EPS estimate of $1.70 and consensus at $1.68. In addition, based on their most recent channel checks, the company's impressive comp performance stemmed from several key factors including enhanced in-store execution, capacity bump-outs, an upgraded bar area and favorable consumer spending power trends.

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 $40.94 yesterday.

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