Dunkin’ is a much larger proposition than Krispy Kreme Doughnuts (NYSE:KKD) with over 10,000 Dunkin Brands Group Inc (NASDAQ:DNKN)’ Donuts in 31 countries and 7,000 Baskin-Robbins in over 50 countries. These are almost 100% franchised according to CEO Nigel Travis on a National Doughnut Day interview on Bloomberg News.
Compared to Starbucks Corporation (NASDAQ:SBUX)’ 18,000 locations Dunkin’ is becoming quite the competitor and it’s seeking to revamp its stores to be more cozy so America won’t just run on Dunkin’. (Uhh, I think they’re going to have to change the slogan.) As Bloomberg reported on June 7, the company has offered franchisees three decor options to give customers a slower and more inviting space to dawdle. Buying Dunkin’ on speculation of the success of its cozy coffeehouse initiative to compete with Starbucks is probably premature.
Joltin’ java…not so much
Starbucks Corporation (NASDAQ:SBUX) is trading at a trailing P/E of 33.05 with a 1.30% yield. Yet its PEG of 1.61 is still higher than Krispy Kreme’s 1.15 as analysts still think there’s more growth percolating for this smallest name of these three. Starbucks (and Dunkin’) also has competition from Panera Bread Co (NASDAQ:PNRA) as a sit down alternative to wire up and wind down.
Starbucks Corporation (NASDAQ:SBUX) is also at 52 week highs, but has underperformed the S&P 500 over the last year only up 23.11% and its short interest, although small at 1.30%, is increasing.
Are there any crumbs (of gains) left?
Krispy Kreme Doughnuts (NYSE:KKD) can keep growing profits by sticking to what it does so well, the doughnut, and slowly expanding its coffee sales as CEO Morgan has vowed. Note: would someone please nominate CEO Morgan for best small cap CEO for 2013? The company has executed flawlessly over the last four plus years and its expansion plans are more reasonable than in the go-go days of the early part of the 2000s.
That said, a triple in seven months should cause those with big gains to push away from the table and let it digest. This name should still be considered speculative, although less so than before.
Dunkin Brands Group Inc (NASDAQ:DNKN)’ Brands investors may want to consider whether all these initiatives on menu and coffeehouse decor have led the company to bite off more than it can chew. Still, it has the biggest yield and it is aggressively growing the brand and fearlessly challenging all comers including Starbucks Corporation (NASDAQ:SBUX), McDonald’s Corporation (NYSE:MCD), and Panera Bread Co (NASDAQ:PNRA).
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks Corporation (NASDAQ:SBUX).
The article Too Late for the Doughnut Party? originally appeared on Fool.com.
AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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