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 Group
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.
|Headquarters (founded)||Canton, Mass. (2004)|
|Market Cap||$3.6 billion|
|Trailing-12-Month Revenue||$656.8 million|
|Management||CEO Nigel Travis (since January 2009)
CFO Paul Carbone (since June 2012)
|Trailing-12-Month Return on Equity||11.6%|
|Cash/Debt||$218.7 million / $1.5 billion|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 40% of the 247 members who have rated Dunkin' believe the stock will underperform the S&P 500 going forward.
Though the company has great expansion plans and many exciting news announcements, there is an underlying and fundamental issue with its structure as an "Asset - Light" business . The company has almost $2B in debt, backed by an overinflated valuation of its Trade Name. Though this is a company that makes its money through franchise and licensing agreements, hence lending to the idea of an asset-light strategy, backing up a substantial amount of debt with an Intangible Asset (Trade Names, etc.) is a very risky move. I will be curious to see what happens in the next 2-3 years with all of the expansions, but I think that in the end the company will have to come up with a new strategy, which could create investor-averse conditions.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of McDonald's and Starbucks. Motley Fool newsletter services have recommended buying shares of McDonald's and Starbucks, as well as writing covered calls on Starbucks. Try any of our Foolish newsletter services free for 30 days.