Industry competition
Starbucks Corporation (NASDAQ:SBUX)and McDonald’s Corporation (NYSE:MCD)are the two main competitors of Dunkin’ Brands. All three are quick-serve restaurants aimed at being the consumers’ number one choice for coffee and food. However, Dunkin’ Donuts dominates as the top retailer for coffee in America, as well as being the number one baked goods and coffee chain in the world.
| Company | Dunkin’ Brands | Starbucks | McDonald’s |
|---|---|---|---|
| Market Cap | $4.61 billion | $53.1 billion | $95.8 billion |
| P/E | 36.95 | 33.8 | 17.5 |
| Forward P/E | 23.80 | 26.6 | 15.7 |
| Dividend Yield | 1.80% | 1.20% | 3.20% |
| Latest U.S. same-store sales growth | Dunkin Donuts: +4%Baskin-Robbins: +1.6% | +7% | +1.6% |
| YTD Performance | +29.4% | +28.56% | +5.5% |
Starbucks Corporation (NASDAQ:SBUX) has been on a tear this year and blew away earnings in July. It has the projected earnings growth and expansion plans to support a continued run higher. It also has a healthy dividend, which could easily be raised due to increased free cash flow. It has pulled back about 5% since reaching its 52-week high and could be a top performer for the rest of 2013 and in 2014.
McDonald’s Corporation (NYSE:MCD), arguably the most recognizable brand in the world, has one of the best dividends you will find. It has paid and raised its dividend every year since going public in 1976, a feat few other companies can rival. However, McDonald’s Corporation (NYSE:MCD) has had a tough stretch over the last three months. It missed on both the top and bottom lines in its second quarter earnings report last month, and management said they expect results for the rest of the year to be “challenged.” This may be due to its negative same-store sales in China, Japan, Australia, and some European nations, but regardless, this is not something you want to hear as an investor. The stock has fallen about 5% since this report and could fall further if it falters again in the third quarter.
Dunkin Brands Group Inc (NASDAQ:DNKN) has the edge in this comparison due to its high growth and dividend, but both Starbucks Corporation (NASDAQ:SBUX) and McDonald’s Corporation (NYSE:MCD) are in great positions to outperform the market in 2014. If Starbucks Corporation (NASDAQ:SBUX) were to pull back another 5%, I would be a buyer because of its international growth. I would also be a buyer of McDonald’s Corporation (NYSE:MCD) if it fell to where it yielded 3.5%, because the yield would provide income while waiting for the company’s operations to turn itself around.
The Foolish bottom line
Dunkin Brands Group Inc (NASDAQ:DNKN) is home to two of the largest and best brands on Earth. It has pulled back slightly since reaching its 52-week high a few short weeks ago, but this is nothing more than a buying opportunity. I have been long Dunkin’ Brands for over a year and will continue adding to this position on any pullbacks.
The article America Runs on Dunkin’ and So Should Your Portfolio originally appeared on Fool.com and is written by Joseph Solitro.
Joseph Solitro owns shares of Dunkin’ Brands Group . The Motley Fool recommends McDonald’s and Starbucks. The Motley Fool owns shares of McDonald’s and Starbucks.
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