Dunkin (DNKN) Estimates Trimmed Ahead of Earnings - RBC

RBC Capital analyst, David Palmer, slightly cut 2016 estimates on Dunkin Brands (NASDAQ: DNKN) group ahead of earnings due to a K-cup drag on US demand and currency, Estimates only drop 1% to $2.16 from $2.18 The slight drop in estimates wasn't enough to spur a change to the Outperform rating and the price target remains at $50.

Over the long-term, US Dunkin Donuts (73% of DNKN profit) has been one of the steadiest share gainers in US restaurants. While SSS growth has slowed over the last two years, Some reasons for the slowdown in SSS growth include:

1) stalled new product news and innovation

2) decreasing at-home coffee prices

3) increasingly convenient access to good drip coffee both at home and away from home

4) franchisee-led price increases and a lack of nationally advertised value

5) launch of Dunkin Branded K-cups in supermarkets (and other retail channels) in May 2015

In light of the recent sales slowdown, the analyst sees three major reasons for improving SSS trends at DNKN in 2016 and beyond:

1) easing comparisons from the Dunkin K-cup launch in May 2016

2) the real launch of Smoothies in 2016

3) increased value-oriented marketing

For an analyst ratings summary and ratings history on Dunkin' Brands click here. For more ratings news on Dunkin' Brands click here.

Shares of Dunkin' Brands closed at $39.36 yesterday.

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