Dunkin Brands (DNKN) Stock Gets Creamed in Pre-Market Trading on Weak Guidance

NEW YORK (TheStreet) -- Shares of Dunkin Brands Group Inc. (DNKN) are lower by 7.07% to $42.95 in pre-market trading on Thursday, after the Dunkin' Donuts/Baskin Robbins operator issued weak earnings and sales guidance for fiscal 2015.

Dunkin is expecting fiscal 2015 adjusted earnings per share to be between $1.88 and $1.91 per share, while analysts polled by Thomson Reuters have forecast for earnings of $2.02 for the year.

The munchkin maker is expecting its U.S. comparable store sales growth to be approximately 1.4%, which is below its previous guidance of a rise between 2% and 3%.

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"This has been a challenging year for our businesses. We are pleased that Dunkin' Donuts' 2014 U.S. comparable store sales and transactions remained positive, although not as positive as we hoped because of continued pressure on the consumer and decelerating sales of packaged coffee in our restaurants. We expect these trends to continue into next year," company CEO Nigel Travis said.

The company said it will report its fiscal 2014 fourth quarter and full year results on February 5, 2015.

Separately, TheStreet Ratings team rates DUNKIN' BRANDS GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate DUNKIN' BRANDS GROUP INC (DNKN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DUNKIN' BRANDS GROUP INC has improved earnings per share by 40.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DUNKIN' BRANDS GROUP INC increased its bottom line by earning $1.36 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.36).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Hotels, Restaurants & Leisure industry average. The net income increased by 36.0% when compared to the same quarter one year prior, rising from $40.22 million to $54.70 million.
  • The gross profit margin for DUNKIN' BRANDS GROUP INC is currently very high, coming in at 80.12%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.39% significantly outperformed against the industry average.
  • Net operating cash flow has remained constant at $56.18 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -17.67%.
  • You can view the full analysis from the report here: DNKN Ratings Report

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