Please ensure Javascript is enabled for purposes of website accessibility

Why Dunkin’ Brands Stock Fell 20% in March

By Demitri Kalogeropoulos – Apr 3, 2020 at 8:53AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

COVID-19 mitigation efforts have pressured sales in recent weeks.

What happened

Dunkin' Brands (DNKN) shareholders underperformed a weak market last month. Their stock fell 20% compared to a 12.5% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump left shares down over 33% so far in 2020, compared to a 22% drop in broader indexes.

A woman holding a to-go coffee cup.

Image source: Getty Images.

So what

The coffee and snack giant joined most restaurant industry peers in falling last month as COVID-19 forced dramatically lower customer traffic at restaurants and fast-food chains.

Dunkin' switched to carry-out and delivery service on March 17, for example, to comply with government efforts to slow the spread of the virus. Investors are worried about the loss of short-term revenue and the uncertainty around when Dunkin' will be able to reopen its full dining services.

Now what

Dunkin' reported cash holdings of over $700 million as of Dec. 28, which should help it navigate through any short-term disruption in sales. Yet it appears that aggressive social distancing efforts will last at least six weeks and produce a significant drag on its early 2020 revenue and profit trends.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dunkin Brands Group Stock Quote
Dunkin Brands Group
DNKN

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.