Starbucks Corporation (SBUX), Dunkin Brands Group Inc (DNKN): A Caffeine Company Addicted to Growth

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Last week, Dunkin Brands Group Inc (NASDAQ:DNKN)’ posted EPS of $0.41 for the 2Q compared to the $0.33 for the same period last year — this comes as U.S. same-store sales grew 4% and sales were up 6%.

Billionaire David Einhorn of Greenlight Capital took a short position in Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) a couple of years ago, stating that the company had questionable accounting practices. The company is down nearly 20% over the past two years.

Meanwhile, Green Mountain has a big bet on the Keurig Single Cup brewing technology. Back in May, the company expanded its partnership with Starbucks for another five years, tripling the number of Starbucks drinks to be sold in K-Cups. This helps put Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) as the leader in the single-serve market.

Green Mountain is also looking to optimize its efficiency and trim costs. Back in May, the company reduced its workforce across nine North American K-Cup/Vue pack production locations. Thanks to its initiatives, the company now has an operating margin of 16% and net profit margin of 9.7%.

Bottom line

Starbucks Corporation (NASDAQ:SBUX) is the best pure play on the robust coffee industry. While Dunkin Brands Group Inc (NASDAQ:DNKN)’ appears to be offering investors an impressive growth opportunity due to Westward expansion, Green Mountain is facing too much competition from the likes of Starbucks for me to get excited about the stock.

The article A Caffeine Company Addicted to Growth originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave owns shares of Starbucks. The Motley Fool recommends Green Mountain Coffee Roasters and Starbucks. The Motley Fool owns shares of Starbucks. Marshall 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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