Watch Out: Barbarians At The Gate For Dunkin Brands Group (DNKN)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Dunkin Brands Group ( DNKN) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Dunkin Brands Group as such a stock due to the following factors:

  • DNKN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.3 million.
  • DNKN has traded 348,584 shares today.
  • DNKN traded in a range 202.9% of the normal price range with a price range of $1.46.
  • DNKN traded above its daily resistance level (quality: 52 days, meaning that the stock is crossing a resistance level set by the last 52 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in DNKN with the Ticky from Trade-Ideas. See the FREE profile for DNKN NOW at Trade-Ideas

More details on DNKN:

Dunkin' Brands Group, Inc., together with its subsidiaries, develops, franchises, and licenses quick service restaurants under the Dunkin' Donuts and Baskin-Robbins brands worldwide. The stock currently has a dividend yield of 2%. DNKN has a PE ratio of 31. Currently there are 11 analysts that rate Dunkin Brands Group a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Dunkin Brands Group has been 1.9 million shares per day over the past 30 days. Dunkin Brands Group has a market cap of $5.1 billion and is part of the services sector and leisure industry. The stock has a beta of 0.35 and a short float of 11.2% with 10.20 days to cover. Shares are up 24% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dunkin Brands Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance, impressive record of earnings per share growth and increase in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for DUNKIN' BRANDS GROUP INC is currently very high, coming in at 79.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.78% is above that of the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • DUNKIN' BRANDS GROUP INC has improved earnings per share by 19.0% 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 $1.66 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $1.66).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 11.7% when compared to the same quarter one year prior, going from $22.96 million to $25.63 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

If you liked this article you might like

Dow Dives 1,032 Points as Volatility Spikes, Bond Yields Rise

Dow Dives 1,032 Points as Volatility Spikes, Bond Yields Rise

Dunkin' Brands' New 3-Year Blueprint Aims to Grow Sales, Overhaul Menu

Dunkin' Brands' New 3-Year Blueprint Aims to Grow Sales, Overhaul Menu

The Dow's Wild Ride - 5 Things You Must Know Before the Market Opens Tuesday

The Dow's Wild Ride - 5 Things You Must Know Before the Market Opens Tuesday

American Still Runs on Dunkin' as Coffee Chain Reports Earnings Beat