Is Dunkin’ Brands Enticing After Recent Headlines?

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With shares of Dunkin’ Brands (NASDAQ:DNKN) trading around $49, is DNKN an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Dunkin’ Brands owns, operates, and franchises quick service restaurants under the Dunkin’ Donuts and Baskin-Robbins brands worldwide. The company operates in four segments: Dunkin’ Donuts U.S., Dunkin’ Donuts International, Baskin-Robbins International, and Baskin-Robbins U.S. Its restaurants offer coffee, donuts, bagels, ice cream, frozen beverages, baked goods, and related products. The increasing popularity of the product offerings by Dunkin’ Brands is fueling excellent growth for the company.

Dunkin’ Brands reported an impressive set of year-over-year financial results for the fourth-quarter and fiscal year 2013. During the quarter, net income grew 23 percent to $42.1 million from $34.2 million, and revenue increased 13 percent from $161.7 million to $183.2 million. U.S. same-store sales for the quarter increased 3.5 percent at Dunkin’ Donuts and 2.2 percent at Baskin Robbins. During the full fiscal year, net income rose 36 percent to $146.9 million from $108.3 million and revenues increased 8 percent to $713.8 million from $658.2 million. U.S. same-store sales rose 3.4 percent at Dunkin’ Donuts and 0.8 percent at Baskin Robbins.

“We are steadfastly committed to driving profitable growth for both our franchisees and our shareholders, a commitment we delivered on yet again in our second full year as a public company,” said Paul Carbone, CFO, Dunkin’ Brands Group Inc. “As a result of strong topline sales growth and our intense focus on restaurant-level returns, franchisee profitability for both brands is healthier than it’s ever been. Additionally, our nearly 100 percent franchised, asset-light business model enabled us to return more than $100 million to shareholders in 2013 through our quarterly dividends and ongoing share repurchases. We’re also excited to announce the board of directors’ decision to increase our first quarter dividend more than 20 percent over our fourth-quarter 2013 dividend.”

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