Summary
Dunkin' Brands reported solid Q2 results, beating estimates on both their top and bottom line - despite this, upside isn't as compelling as before.
Revenue outlook seems stable, with DNKN expanding intogrowing regions, and coffee demand keeping steady; potential in Baskin-Robbin's pivot.
Costs remain steady, with management keeping OpEx at bay; commodity prices may pressure margins in the future, should coffee prices rise.
Recent run in price has caused valuations to get too high for our taste - limited upside makes an investment much less compelling.
Lower to Hold, $68 PT.
Dunkin' Brands (DNKN) recently reported earnings a few weeks ago, beating estimates across both the top and bottom line. In addition to launching new menu items, and a sturdy demand for coffee in the U.S., the company appears to be focusing on key geographies with rapidly growing middle-class populations.
Source: QSR Magazine
Results were good, although some areas - such as the Baskin-Robbins segment - are lagging, and at today's valuation the bull case is just less compelling than before. As a result, we would take some money off the table as shareholders, and wait for a pullback in valuation before buying anymore shares if a prospective shareholder.
