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What's in the Cards for Dunkin' Brands (DNKN) Q3 Earnings?

Dunkin' Brands Group, Inc.DNKN is set to release third-quarter 2018 results on Oct 25, before market opens.

Notably, the company's earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 5.4%.

Q3 Expectations

The question lingering in investors' minds is whether Dunkin' Brands will be able to deliver an earnings beat in the quarter to be reported. The Zacks Consensus Estimate for third-quarter earnings is pegged at 73 cents, which marks an increase of 19.7% from the year-ago quarter. Revenues are estimated at $344.2 million, reflecting a rise of 53.5% from a year ago.

Let's delve into the factors that are expected to have had an impact on the company's Q3 performance.

Factors at Play

Dunkin' Brands increased focus on executing the Dunkin Donuts' U.S. Blueprint for Growth that involves enhancing its beverage portfolio and improving traffic will continue to drive the company's results in the third quarter. With the rising demand for coffee, the company is expected to gain from addition of new coffee beverages to its menu, both in the value and premium offering segments. Further, menu innovations, breakfast menu optimization, loyalty programs, digital and sales building initiatives bode well for the company.

Moreover, the increase in royalty income is expected to boost revenues. DD Perks Loyalty Program is likely to be a major sales driver, primarily owing to the company's brand recognition.

Per the Zacks Consensus Estimate, comparable store sales growth for Dunkin' Donuts U.S is estimated at 1.4% in the to-be-reported quarter compared with 0.6% in the same quarter previous year. Additionally, comparable store sales growth for Dunkin' Donuts International is projected at 4% for the third quarter compared with 1.3% in the prior-year quarter.

As far as Baskin-Robbins U.S. segment is concerned, comparable store sales growth is projected at 1% for the quarter to be reported against 0.4% decline seen in the same quarter last year. Demand for beverages, including shakes, smoothies and the take-home category, is expected to drive sales.

Furthermore, Dunkin' Brands operates on a full-fledged franchise model. We believe re-franchising a large chunk of its system will reduce capital requirements and facilitate earnings per share growth.

Dunkin' Brands Group, Inc. Price and EPS Surprise

Dunkin' Brands Group, Inc. Price and EPS Surprise | Dunkin' Brands Group, Inc. Quote

What Our Model Indicates

Our proven model does not suggest a beat for Dunkin' Brands in the quarter to be reported. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for that to happen. Unfortunately, that is not the case here, as you will see below.

Dunkin' Brands has an Earnings ESP of -1.19% and a Zacks Rank #2, a combination that reduces the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Stocks to Consider

Here are a few stocks from the Restaurant space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in their quarterly reports.

Noodles & Company NDLS has an Earnings ESP of +15.39% and a Zacks Rank #1.

Wingstop Inc. WING has an Earnings ESP of +4.48% and a Zacks Rank #2.

Ruth's Hospitality Group, Inc. RUTH has an Earnings ESP of +14.71% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

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Noodles & Company (NDLS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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