Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, coffee shop operator Dunkin' Brands (Nasdaq: DNKN ) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Dunkin's business and see what CAPS investors are saying about the stock right now.
Dunkin' facts
| Headquarters (Founded) |
Canton, Mass. |
| Market Cap |
$3.07 billion |
| Industry |
Restaurants |
| Trailing-12-Month Revenue |
$609.5 million |
| Management |
CEO Nigel Travis (since 2009)
CFO Neil Moses (since 2010) |
| Trailing-12-Month Operating Margin |
33.2% |
| Cash/Debt |
$181.8 million / $1.49 billion |
| Competitors |
McDonald's (NYSE: MCD )
Starbucks (Nasdaq: SBUX )
Tim Hortons (NYSE: THI ) |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 56% of the 202 members who have rated Dunkin' believe the stock will underperform the S&P 500 going forward. These bears include TMFBWItime and NHWeston.
Earlier this fall, TMFBWItime poked a few holes in the Dunkin' bull case:
[D]ebt is massive, and dead weight [Baskin-Robbins] is only getting heavier. I see this only going down. This new duo makes a one stop shop for unhealthy eating. Compared to healthier options like Starbucks, who also offer wifi and cheerful staff, the writing is on the wall for [Dunkin'].
In fact, Dunkin' currently sports a whopping debt-to-equity of nearly 204%. That's much higher than that of rivals like McDonald's (94%), Starbucks (13%), and Tim Hortons (39%).
CAPS member NHWeston expands on the underperform argument:
I want to love this stock. I can't. Too much debt, a growth plan that is not realistic, an IPO loaded with profiteering ... and the coffee. Unlike most folks, I think coffee is a market that cannot be oversaturated but their coffee just does not measure up to Starbucks, [Caribou Coffee], or even ... [shudder] ... McDonald's. And now they're doing slurpees. Maybe at [$14.00 per share]. Maybe.
What do you think about Dunkin', or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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