Is Dunkin’ Brands Too Expensive?

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E = Equity to Debt Ratio Is Weak                 

This is one of the biggest negatives for the company. The debt-to-equity ratio is alarming, the balance sheet is negative, and cash flow isn’t very impressive. Operating cash flow is $154.42 million. Levered free cash flow is $141.92 million. The good news is that margins are excellent.

Debt-To-Equity

Cash

Long-Term Debt

DNKN

5.29

$252.62 Billion

$1.85 Billion

SBUX

0.11

$2.46 Billion

$549.60 Million

MCD

0.96

$2.19 Billion

$13.26 Billion

 

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T = Technicals on the Stock Chart Are Strong          

Dunkin’ Brands has outperformed Starbucks and McDonald’s Corp (NYSE:MCD) over the past year. As far as dividend yield, McDonald’s yields 3.30 percent, Starbucks yields 1.50 percent, and Dunkin’ Brands yields 2 percent.

1 Month

Year-To-Date

1 Year

3 Year

DNKN

3.48%

11.46%

27.19%

1.85%

SBUX

-2.32%

-0.17%

12.18%

139.30%

MCD

2.04%

6.72%

-3.31%

59.66%

 

At $36.81, Dunkin’ Brands is trading above all its averages.

50-Day   SMA

34.73

100-Day   SMA

32.77

200-Day   SMA

32.37

 

E = Earnings Have Been Inconsistent                      

Earnings have been inconsistent on an annual basis. Revenue has steadily improved over the past few years.

2008

2009

2010

2011

2012

Revenue   ($)in   millions

N/A

538.07

577.14

628.20

658.18

Diluted   EPS ($)

N/A

0.55

0.42

0.35

N/A

 

When we look at the last quarter on a year-over-year basis, we see a decline in revenue.

12/2011

3/2012

6/2012

9/2011

12/2012

Revenue   ($)in   millions

168.50

152.37

172.39

171.72

161.70

Diluted   EPS ($)

0.05

0.21

0.15

0.26

N/A

 

Let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

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