LOS ANGELES, Feb 9 (Reuters) - Dunkin’ Brands Group Inc , owner of the Dunkin’ Donuts and Baskin-Robbins brands, on Thursday reported a better-than-expected quarterly profit as a favorable tax rate boosted results.
Shares were up 2.9 percent in early trading after analysts brushed off the company’s softer-than-expected 2017 forecast as conservative.
Net income attributable to Dunkin’ Brands was $56.1 million, or 61 cents per share, for the fourth quarter. The company reported a loss of $8.9 million, or 10 cents per share, a year earlier.
Dunkin’ had a 64-cent quarterly profit, excluding items, which topped analysts’ average estimate of 61 cents per share, according to Thomson Reuters I/B/E/S.
Total sales rose almost 6 percent to $215.7 million.
Sales at established U.S. Dunkin’ Donuts outlets, which contribute about three-fourths of company revenue, rose 1.9 percent in the fourth quarter, just missing analysts’ average estimate of 2.1 percent, according to Consensus Metrix.
An increase in spending on things like Cold Brew coffee, doughnuts and the sweet black pepper bacon breakfast sandwich offset a decline in traffic during the quarter.
Dunkin’ forecast adjusted earnings per share of $2.34 to $2.37 for 2017, below analysts’ average estimate of $2.41.
“The initial EPS guidance for 2017 is a bit disappointing, though we see upside potential to this initial guidance,” Maxim Group analyst Stephen Anderson wrote in a client note.
Among other things, Anderson said the 2017 guidance is based on 385 new units, lower than 2016, and that the company’s new bottled coffee deal with Coca-Cola Co has the potential to boost earnings.
Dunkin’ also raised its quarterly cash dividend by 7.5 percent to 32 cents per share, representing a 2.5 percent dividend yield.
Reporting by Lisa Baertlein in Los Angeles