Last year, Dunkin Brands Group Inc (NASDAQ:DNKN)’ revenue increased 5%, while free cash flow declined 8% due to working capital adjustments and timing. In 2012, Dunkin Brands paid out 53% of its free cash flow. Currently the company pays $0.76 per share per year in dividends, yielding 1.8%.
The balance sheet leaves much to be desired. Cash and investments as a percentage of stockholder’s equity calculate to about 72% as of the end of 2012. However, it’s debt to equity stands at a staggering 521%. Its operating income exceeds interest expenses by only 3 times.
You need to look out for the company’s divided focus between Dunkin Donuts and Baskin Robbins. In the future, look for Dunkin’ Donuts to flourish both in domestic markets and international markets. However, in the domestic markets Baskin Robbins continues to struggle, with same store sales declining 4% in its most recent quarter. In the international markets, Baskin Robbins flourished, with same stores sales increasing 4%.
Brand in a cup
The little “K-Cups” that go into the sleekly designed Keurig coffee maker gives Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) a form of brand recognition. Every successful company possesses a trademark design, and its K-Cups and coffee makers represent just that.
Green Mountain Coffee Roasters introduces new models of its coffee makers to keep customers’ interest. In addition, it partners with various companies to allow them to put their products into its K-Cups, allowing for product diversity and increasing brand visibility for Green Mountain Coffee and its partners.
Green Mountain Coffee Roasters certainly resides in a steep growth trajectory. Revenue increased 46% in 2012, and free cash flow swung from a negative $283 million to a positive $77 million last year.
That said, Green Mountain Coffee’s small cash position leaves me a little uncomfortable at 3% of stockholder’s equity. In addition, it’s long-term debt to equity stands at 21%.
Conclusion
In summary, all three of these companies enjoy brand recognition, sell high quality products, seek to improve their line of products and work to maintain and expand branding opportunities. The balance sheets of Dunkin Brands and Green Mountain Coffee Roasters can stand some improvement. However, these companies deserve more of your research time.
William Bias has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters and Starbucks. The Motley Fool owns shares of Starbucks. William is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article These Three Companies are Worth Researching originally appeared on Fool.com is written by William Bias.
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