Why Dunkin’ Brands Stock Fell 20% in March

What happened

Dunkin' Brands (NASDAQ: DNKN) shareholders underperformed a weak market last month. Their stock fell 20% compared to a 12.5% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump left shares down over 33% so far in 2020, compared to a 22% drop in broader indexes.

A woman holding a to-go coffee cup.

Image source: Getty Images.

So what

The coffee and snack giant joined most restaurant industry peers in falling last month as COVID-19 forced dramatically lower customer traffic at restaurants and fast-food chains.

Dunkin' switched to carry-out and delivery service on March 17, for example, to comply with government efforts to slow the spread of the virus. Investors are worried about the loss of short-term revenue and the uncertainty around when Dunkin' will be able to reopen its full dining services.

Now what

Dunkin' reported cash holdings of over $700 million as of Dec. 28, which should help it navigate through any short-term disruption in sales. Yet it appears that aggressive social distancing efforts will last at least six weeks and produce a significant drag on its early 2020 revenue and profit trends.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.

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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