The Real Deal on Wall Street: Can Dunkin Brands Get a Little Love, Please?

I am hard pressed to find someone on Wall Street that is not a raging bull on Starbucks (NASDAQ: SBUX).

The pitch is well worn; Starbucks is an increasingly global brand now trying to penetrate different products (juice, beer) other than cups of java and spinach feta wraps. To that I say, why no love for the lighter coffee brewing Dunkin Brands?

One would think given the strong projected growth rates for the company, and what looks like a flattening out in Starbucks’ share price (recent guidance was no help in inverting the chart), investors would entertain Dunkin Brands (NASDAQ: DNKN) as an alternative play on global coffee demand. The stock only until recently began to percolate into the company’s upcoming earnings report on a reduced sense of anger regarding a secondary offering.

The real deal is that Dunkin Bands is also a global brand, does things well other than coffee, has products that are in supermarket aisles and Keurig machines, and should benefit from lower commodity costs.

Importantly, adjusted operating income is growing faster than sales and the mix of business (iced coffee, for example) has been favorable to gross margins.

The stock is a touch pricey for my taste normally (23x forward earnings), but that multiple could expand if analysts raise their earnings estimates for 2012/2013 as I expect following the latest read on the financials.