Dunkin' Donuts & Cracker Barrel: Our New SA Articles On These 2 Food Stocks

Why I'm Not Falling In Love With Dunkin' Brands

Summary

• The company can improve comp sales of Dunkin' Donuts U.S. in 2016.
• DNKN’s dividend doesn’t look completely safe and there isn’t much more room for dividend growth.
• The company’s ROE has improved significantly as a result of the enormous rise in equity multiplier which more than offset the sharp decrease in net margin.
• DNKN’s net margin has fallen owing to the increase in tax and interest burden.
• Shares look expensive and the premium valuation isn’t justified.

Dunkin' Brands Group (NASDAQ:DNKN) operates in the QSR segment of the restaurant industry. The company franchises restaurants under Dunkin' Donuts and Baskin-Robbins brands. With an asset-light business model, DNKN functions through four segments: Dunkin' Donuts U.S., Dunkin' Donuts International, Baskin-Robbins International and Baskin-Robbins U.S.

In 2015, although DNKN achieved 10% and 11% growth in adjusted operating income and adjusted EPS, respectively, it wasn't the best year for the company primarily because of the lackluster Dunkin' Donuts U.S. comp sales performance. DNKN's Dunkin' Donuts segments generate about 80% of the company's total revenues, of which about 96% are in the U.S segment. Hence the company's ability to grow comp store sales and profitability in Dunkin' Donuts U.S determines its success in the long-term more than anything else. In Q4 2015, comp sales of Dunkin' Donuts U.S. fell by 0.8% and this disappointed many analysts who were expecting this segment to report stronger comp sales... READ MORE



Wait For A Pullback In Cracker Barrel

Summary

• Recently CBRL’s 20-day and 50-day exponential moving averages crossed above the 200-day exponential moving average.
• This might be an indication of a positive long-term shift in trend.
• Low traffic is CBRL’s biggest immediate concern right now.
• The company is planning to adopt bold measures, which could help improve traffic in the latter half of 2016.
• Intrinsic value range for CBRL is $140 to $158 for its stock.

Since the turn of the year, the stock of Cracker Barrel (NASDAQ:CBRL) has been doing really well. Currently CBRL's shares are sitting roughly 8% and 9% above their 50-day simple and exponential moving averages, respectively, and the short-term averages are resting above their long-term counterparts signaling an upward movement in the trend. Moreover, recently the 20-day and 50-day exponential moving averages crossed above the 200-day exponential moving average. This might be an indication of a positive long-term shift in trend... READ MORE