Baked Good Landing
Source:  Tim Hortons

Krispy Kreme Doughnuts (NYSE:KKD), Dunkin' Brands Group (NASDAQ:DNKN), and Starbucks (NASDAQ:SBUX) have reported positively strong earnings reports in contrast to what much of the casual dining and retail stores have been doing lately and despite fierce competition from each other.  Can Tim Hortons (NYSE:THI) now step up to the plate and hit a home run when it reports its earnings on Feb. 20? 

Lackluster growth
Tim Hortons' growth has been consistent but lackluster. Last quarter revenue rose 2.9%, same-store sales advanced 2.9% in the US and 1.7% in Canada, and net income tacked on 7.7%. Chief executive Marc Caira blamed "a challenging operating environment." On Tim Hortons' last conference call, he went on to say, "We are operating [in a] low-growth environment with ongoing competitive intensity, where the value-conscious consumer is firmly in control of the choices available to her."

It wasn't bad by any means, but it seriously lags the rapid growth of competitors Krispy Kreme, Dunkin' Brands, and Starbucks. Now that these three have reported eye-popping growth and results, it's on Tim Hortons to show its stuff and not just blame the environment. The environment seems fine, at least on the potential, as seen by the others.

The other guys
Krispy Kreme's last quarter was the 20th in a row of positive same-store sales growth. Revenue popped 6.7%, same-store sales climbed 3.7%, and adjusted operating income soared 25.7%. While CEO James Morgan did admit that there is a "tepid consumer spending environment," it doesn't seem like it's slowing down Krispy Kreme very much. He expects Krispy Kreme going forward to see "accelerated growth domestically." It's hard to imagine it's impossible for Tim Hortons to also potentially see that.

For Dunkin' Brands last quarter, it was quite similar. Revenue jumped 13%, same-store sales popped 3.5%, and diluted earnings per share leaped 26.5%. CEO Nigel Travis also acknowledged that it was a challenging year for quick service restaurants, but then Dunkin' Brands went ahead and raised the dividend by 21% while mentioning that it plans to aggressively expand. For "challenging" times, Dunkin' Brands makes it look easy. Dunkin' Brands has been seeing steadily increasing traffic and guest checks. Maybe Tim Hortons will pleasantly surprise with its report.

Meanwhile, Starbucks showed more growth last quarter than them all. Revenue rose 12%, same-store sales hopped 5%, traffic climbed 4%, and earnings per share exploded 25% to an all-time record of $0.71. Starbucks CEO Howard Schultz pointed out something interesting. He said that mall traffic had for the first time given up a lot of its traditional volume to online "in a major way," and that actually benefited the chain.

People may have had more time to stop in Starbucks since they did less time shopping elsewhere, or they did some of their online shopping in Starbucks itself. In any event, with Starbucks seeing such incredible growth and record earnings, Tim Hortons should be able to figure out how to jump-start more exciting growth for itself. No excuses.

Foolish final thoughts
For Tim Hortons, Fools may want to wait in the dugout until its earnings report and see what kind of growth it reports as well as its outlook. Sure, you may have to pay a premium if you wait for more certainty, but if Tim Hortons manages to successfully join the growth party, it could still be a home run for years to come... even if you have to pay a little more.

The coffee and a doughnut could get a new huge player soon.
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Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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