Head to Head Survey: Sprouts Farmers Market (SFM) and Dunkin’ Brands (DNKN)

Sprouts Farmers Market (NASDAQ: SFM) and Dunkin’ Brands (NASDAQ:DNKN) are both mid-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Dividends

Dunkin’ Brands pays an annual dividend of $1.39 per share and has a dividend yield of 2.4%. Sprouts Farmers Market does not pay a dividend. Dunkin’ Brands pays out 36.5% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Sprouts Farmers Market and Dunkin’ Brands’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sprouts Farmers Market $4.66 billion 0.66 $158.44 million $1.14 20.32
Dunkin’ Brands $860.50 million 5.65 $350.90 million $3.81 15.50

Dunkin’ Brands has lower revenue, but higher earnings than Sprouts Farmers Market. Dunkin’ Brands is trading at a lower price-to-earnings ratio than Sprouts Farmers Market, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Sprouts Farmers Market and Dunkin’ Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sprouts Farmers Market 1 7 12 0 2.55
Dunkin’ Brands 2 7 10 0 2.42

Sprouts Farmers Market presently has a consensus target price of $27.13, indicating a potential upside of 17.07%. Dunkin’ Brands has a consensus target price of $62.63, indicating a potential upside of 6.05%. Given Sprouts Farmers Market’s stronger consensus rating and higher probable upside, equities analysts plainly believe Sprouts Farmers Market is more favorable than Dunkin’ Brands.

Profitability

This table compares Sprouts Farmers Market and Dunkin’ Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sprouts Farmers Market 3.40% 21.81% 9.07%
Dunkin’ Brands 40.77% -190.44% 6.67%

Insider and Institutional Ownership

92.3% of Sprouts Farmers Market shares are held by institutional investors. Comparatively, 97.7% of Dunkin’ Brands shares are held by institutional investors. 2.6% of Sprouts Farmers Market shares are held by insiders. Comparatively, 3.1% of Dunkin’ Brands shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Sprouts Farmers Market has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Dunkin’ Brands has a beta of 0.29, meaning that its stock price is 71% less volatile than the S&P 500.

Summary

Sprouts Farmers Market beats Dunkin’ Brands on 9 of the 16 factors compared between the two stocks.

About Sprouts Farmers Market

Sprouts Farmers Market, Inc. is a food retailer. The Company operates as a grocery store that offers fresh, natural and organic food that includes fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, body care and natural household items catering to consumers’ interest in health and wellness. As of February 23, 2017, the Company operated 256 stores in 14 states. The Company categorizes the varieties of products it sells as perishable and non-perishable. The perishable product categories include produce, meat, seafood, deli and bakery. Its non-perishable product categories include grocery, vitamins and supplements, bulk items, dairy and dairy alternatives, frozen foods, beer and wine, and natural health and body care.

About Dunkin’ Brands

Dunkin' Brands Group, Inc., together with its subsidiaries, develops, franchises, and licenses quick service restaurants worldwide. The company operates through four segments: Dunkin' Donuts U.S., Dunkin' Donuts International, Baskin-Robbins International, and Baskin-Robbins U.S. Its restaurants offer hot and cold coffee, baked goods, donuts, bagels, muffins, breakfast sandwiches, hard and soft serve ice creams, frozen yogurts, shakes, malts, floats, and cakes. As of December 30, 2017, the company had 12,538 Dunkin' Donuts points of distribution and 7,982 Baskin-Robbins points of distribution. It franchises restaurants under the Dunkin' Donuts and Baskin-Robbins brands. The company is headquartered in Canton, Massachusetts.

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