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Is it Time to Buy the Donuts?

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May 09, 2011 – Comments (10)

Dunkin' Brands - owner of Dunkin' Donuts and Baskin-Robbins ice cream - filed for an IPO last week.  The deal hasn't been priced and there are still details to be released, but I took a stab at running down highlights from the offering and looked at some comparable companies to try and come up with a valuation.

Unless it comes in at a decent discount to peers, I'd rather buy the donuts than the stock.

Anyone planning to try and get in on the deal?

Fool on!

Russ

10 Comments – Post Your Own

#1) On May 09, 2011 at 8:33 PM, truthisntstupid (88.53) wrote:

Who owns them now?  If it's some private equity firm like KKR that has buried them in debt and sucked as much cash as possible from them, I wouldn't buy any at any price.

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#2) On May 09, 2011 at 8:59 PM, rd80 (98.44) wrote:

Three private equity firms.  And, yep, it's loaded with debt.

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#3) On May 09, 2011 at 9:15 PM, truthisntstupid (88.53) wrote:

I suppose a private equity firm could itself conceivably be a good investment, although I wouldn't invest in them.  But has anything IPO'd by private equity firms ever had a decent balance sheet after they were finished with it?

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#4) On May 09, 2011 at 9:35 PM, sajahmeoli (60.85) wrote:

rd80,

I would agree that Dunkin' is probably not a good place to sink your dough right now.

Joking aside, the Dunkin' Donuts brand has managed to come back from the near extinction of the early 90's with some strength. An IPO followed by 2-3 years of good decisions may greatly increase the flavor of this particular plate of cake and ice cream.

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#5) On May 09, 2011 at 9:45 PM, rd80 (98.44) wrote:

...may greatly increase the flavor of this particular plate of cake and ice cream.

The Fool really needs to add a rec button for comments. :)

Since there isn't one, the best I can do is welcome you to my 'Favorites' list. 

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#6) On May 10, 2011 at 2:49 AM, awallejr (83.98) wrote:

Nope won't touch it, though that isn't to say the stock won't do well, just that I prefer investing elsewhere.

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#7) On May 10, 2011 at 8:31 AM, sajahmeoli (60.85) wrote:

#5 rd80,

 Thank you.

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#8) On May 10, 2011 at 9:52 AM, rofgile (99.31) wrote:

I'm thinking of investing in DNKN.  I live in city where they have finally expanded recently over the last year.  2 franchises opened here, and both are consistently busy.

DNKN has saturated the east coast, but the midwest, south, and west of the USA could have lots of expansion.  And DNKN has experience overseas as there are lots of them in Germany, etc.

Personally, I think DNKN could beat starbucks as a place to go (eventually). 

-Rof 

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#9) On May 10, 2011 at 1:39 PM, chk999 (99.97) wrote:

I love the donuts and the ice cream (really, I'll drive miles out of my way to go to a BR) but these post private equity IPOs don't usually do so well. I'll wait on this and see how cashflow and debt retirement play out. Maybe in a few years.

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#10) On May 10, 2011 at 7:52 PM, puccini3005 (29.69) wrote:

Bleh! I like doughnuts too, but your article makes Dunkin seem pretty unappetizing.

No, I wouldn't invest in this one.  I already have enough debt of my own (which I'm trying to get rid of) without buying shares of someone else's...  1.5 Billion is a big anchor.

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