Dunkin' Brands Group, Inc.
) is slated to report its second-quarter 2014 results on Jul 24,
before the opening bell. Last quarter, it posted a negative
surprise of 5.71%. Let's see what is in store for us this season.
Factors to Consider This Quarter
We are concerned that Dunkin' Brands might be particularly hurt
this quarter by the food price inflation. As Dunkin' Donuts and
Baskin-Robbins are almost entirely franchised brands, cost
inflation may force the franchisees to hike menu prices. This in
turn can result in lower comps, which could lead to a contraction
in its margins.
Also, Dunkin' Brands first quarter results were particularly weak
due to inclement weather in the U.S. as comps increased only 1.2%
at Dunkin' Donuts' U.S. locations. To add to the woes, comps
decreased 2.4% internationally.
Although we believe that the company will be able to turnaround
its comps in this quarter, through menu innovation, a drastic
change is not expected yet, particularly in a sluggishly recovering
economy. Additionally, the intense competition in the U.S. in the
doughnut as well as coffee categories also keeps us on the
However, we are encouraged by the introduction of more
drive-through locations, coupled with breakfast-menu optimization.
The company's newly launched digital initiatives and its global
expansion, especially in the in emerging markets, are expected to
drive comps growth internationally.
Our proven model does not conclusively show that Dunkin' Brands is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
: Dunkin' Brands' Earnings ESP, which represents the
difference between the Most Accurate estimate and the Zacks
Consensus Estimate, stands at 0.00%.
: Dunkin' Brands' Zacks Rank #4 (Sell) when combined with a 0.00%
ESP further lowers the predictive power of ESP.
Other Stocks to Consider
Here are some other companies that investors may consider, as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
MGM Resorts International
), with an Earnings ESP of +45.46% and a Zacks Rank #3(Hold).
Buffalo Wild Wings Inc.
), with an Earnings ESP of +5.04% and a Zacks Rank #3.
Zoe's Kitchen, Inc.
) with an Earnings ESP of +50.00% and a Zacks Rank #2 (Buy).
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