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“With our new target, we assume an 18% EPS growth rate over the next 3 years due to accelerated unit growth, and impending customer loyalty/mobile payment initiatives. We continue to believe investors will be willing to pay a premium multiple for companies that exhibit such highly visible and consistent EPS growth,” commented the analysts.
Dunkin’ is trading at a trailing P/E of over 83, which compares to competitors like Starbucks (NASDAQ:SBUX), an investor darling with high growth potential, at just about 30. McDonald’s (NYSE:MCD), which is trying to use coffee to boost breakfast sales, trades at a trailing P/E of about 18.
Growth that strong could definitely warrant the high valuation, and so far the market seems to stand by the bullish case. However, the high end of Dunkin’ Brands’ own forecast comes in a little shy of analyst expectations…
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