Dunkin' Brands Group (NASDAQ:DNKN) and Starbucks (NASDAQ:SBUX) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.
Risk and Volatility
Dunkin' Brands Group has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Starbucks has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.
Institutional & Insider Ownership
82.0% of Dunkin' Brands Group shares are owned by institutional investors. Comparatively, 67.3% of Starbucks shares are owned by institutional investors. 1.8% of Dunkin' Brands Group shares are owned by company insiders. Comparatively, 0.4% of Starbucks shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Dunkin' Brands Group and Starbucks' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Dunkin' Brands Group | 16.84% | -39.92% | 6.03% |
Starbucks | 3.95% | -18.07% | 4.88% |
Earnings & Valuation
This table compares Dunkin' Brands Group and Starbucks' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Dunkin' Brands Group | $1.37 billion | 6.40 | $242.02 million | $3.17 | 33.59 |
Starbucks | $23.52 billion | 5.17 | $928.30 million | $1.17 | 88.81 |
Starbucks has higher revenue and earnings than Dunkin' Brands Group. Dunkin' Brands Group is trading at a lower price-to-earnings ratio than Starbucks, indicating that it is currently the more affordable of the two stocks.
Dividends
Dunkin' Brands Group pays an annual dividend of $1.61 per share and has a dividend yield of 1.5%. Starbucks pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Dunkin' Brands Group pays out 50.8% of its earnings in the form of a dividend. Starbucks pays out 153.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starbucks has raised its dividend for 10 consecutive years. Starbucks is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a breakdown of current recommendations for Dunkin' Brands Group and Starbucks, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Dunkin' Brands Group | 0 | 18 | 4 | 0 | 2.18 |
Starbucks | 0 | 12 | 15 | 0 | 2.56 |
Dunkin' Brands Group presently has a consensus price target of $85.60, suggesting a potential downside of 19.61%. Starbucks has a consensus price target of $98.36, suggesting a potential downside of 5.34%. Given Starbucks' stronger consensus rating and higher probable upside, analysts clearly believe Starbucks is more favorable than Dunkin' Brands Group.
Summary
Starbucks beats Dunkin' Brands Group on 9 of the 17 factors compared between the two stocks.