This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Great Donut Debate Hits Delicious Dilemma

Dunkin' Donuts claims it's the world's leading baked goods and coffee chain, selling more than one billion cups of coffee per year! Founded in 1950 in Quincy, Mass., Dunkin' Donuts became famous for its many varieties of donuts and a wide range of bakery products.

As an investment thesis, DNKN also owns the Baskin-Robbins brand. Baskin-Robbins is the world's largest chain of ice cream specialty shops serving premium ice cream, specialty frozen desserts and beverages to more than 300 million customers each year. Founded in 1946 in Glendale, Calif., the ice cream chain now has more than 6,000 outlets in 49 countries, with roughly 2,400 outlets in the U.S.

You can learn about DNKN's first-quarter 2013 earnings results, which were reported on April 25 at its Web site.

First quarter highlights of the report included:
  • Dunkin' Donuts U.S. comparable store sales growth of 1.7%
  • Added 108 net new restaurants worldwide including 78 net new Dunkin' Donuts in the U.S.
  • Adjusted operating income increased 12.2%
  • Adjusted operating income margin expanded 240 basis points to 43.7%
  • Adjusted EPS increased 16.0% to $0.29

In comparing "donuts to donuts," let's look at a one-year price chart of DNKN using similar metrics to the KKD chart above. DNKN Chart DNKN data by YCharts

It appears the donut and coffee business has been booming the past year. For the sake of comparison, KKD is selling at almost 20 times forward (one-year) earnings and has a price-to-earnings-to-growth (PEG) ratio of a modest 0.88. DNKN stock is selling at over 22 times forward earnings with a PEG of 1.71, almost twice that of KKD's which suggests its shares are more highly valued.

At $40 a share DNKN's dividend yield is 1.9%. KKD doesn't pay a dividend yet. KKD did open some stores in India, which should be a profitable move since "sweets" are very popular there. But, let's face it, KKD is the small fry in the comparison, with a market cap of less than $886 million. DNKN's market cap is over four times larger at $4.29 billion.

So the great donut debate continues.

At the time of publication the author had no position in any of the stocks mentioned. .

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DNKN $45.96 0.39%
KKD $16.79 -0.18%
AAPL $92.76 -0.51%
FB $119.07 1.10%
GOOG $709.64 1.20%


Chart of I:DJI
DOW 17,729.57 +68.86 0.39%
S&P 500 2,057.15 +6.52 0.32%
NASDAQ 4,731.2290 +14.1350 0.30%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs