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Dunkin' Brands Group

Dunkin’ Brands Group (DNKN) has become the second-largest global beverage chain after Starbucks (SBUX). The company rebranded itself in 2019 to Dunkin’, focusing on selling coffee and other beverages instead of donuts. The transformation made sense as consumers move away from unhealthy foods. Dunkin’ was impacted along with other restaurant chains in the initial stages of the COVID-19 pandemic. But the company has seemingly navigated COVID-19 well and after a downturn in comparable sales returned to growth in the U.S. Further, Dunkin’ is now being acquired at a premium. The stock, Dunkin’, is trading at an elevated or full valuation and unlikely to have another bidder. I view the Dunkin’ as a sell at the current full valuation.

Dunkin' Brands Group
Dunkin’ Brands Group (DNKN): At Full Valuation

Overview of Dunkin’ At Full Valuation

Dunkin’ Brands Group, Inc. is a leading global quick service restaurant focusing on coffee and ice cream. The company has two brand segments – Dunkin’ and Baskin-Robbins – and three operating segments that are Dunkin U.S. (78% of revenue), Baskin-Robbins U.S. (6% of revenue), and International (16% of revenue). There are approximately 9,500+ U.S. and 3,500+ International Dunkin’ stores and 2,500+ U.S. and 5,400+ International Baskin-Robbins stores. The Dunkin’ stores sell hot and cold coffee, donuts, and other baked food. Baskin-Robbins sells ice cream. Dunkin’ also licenses its brand for products sold in retail outlets, such as K-Cup pods and ready-to-drink coffees. The company operates a 100% franchise business model. In 2019, companywide revenue was ~$1.37B and systemwide sales were over $12.1B.

Dunkin’ Is Being Taken Private

On October 26, 2020, Dunkin’ announced that it was in merger talks with Inspire Brands after rumors began to surface a few days before. Inspire Brands is the owner of over 11,000 Arby’s, Buffalo Wild Wings, SONIC, and Jimmy Johns. On October 30, 2020, Dunkin’ announced that it agreed to be acquired for $8.76 billion in cash or $106.50 per share…

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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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