KeyBanc Previews Dunkin Brands Q4 Earnings, Says Coffee Chain Set For EPS Beat

For Dunkin Brands Group Inc DNKN, the U.S. segment is vital, as it represents 82 percent of profits.

Checks reveal an improvement in the chain’s traffic share during the key morning and afternoon slots during the fourth quarter, according to KeyBanc Capital Markets.

The coffee-and-donuts chain reports Q4 results Thursday, Feb. 7. 

The Analyst

Analyst Eric Gonzalez maintains a Sector Weight rating on Dunkin Brands Group.

The Thesis

Based on proprietary geolocation data, the Q4 same-store-sales estimate for Dunkin Bands’ U.S. segment has been raised from 1.5 percent to 2 percent, Gonzalez said in a Jan. 31 preview note. 

The company gained overall market share as well as during the key morning and afternoon segments, which coincided with the mid-November relaunch of espresso-based beverages, the analyst said. 

Dunkin Brands also seemed to benefit from national value promotions, favorable weather conditions and a general improvement in fast food industry trends, Gonzalez said. 

KeyBanc expects the company to report EPS of 63 cents Thursday, beating a consensus estimate of 61 cents.   

In Gonzalez' view, 2018 was a foundational year for Dunkin Brands, and its EBITDA growth could accelerate to around 7 percent in 2019 and to 8 percent in 2020, with growth initiatives driving further share gains.

Price Action

Dunkin Brands shares were up 0.76 percent at $68.79 at the time of publication Monday. 

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