In the third quarter, Bloomin' Brands (NASDAQ: BLMN ) had more than $1 billion in sales, while Dunkin' Brands (NASDAQ: DNKN) had just $209 million in its third quarter. But of these two companies, which is the better buy? Comparing both companies' numbers side by side tells a surprising story of which company is the strongest. Bloomin', with a $2.02 billion market cap, generates $8.56 per share in sales, while Dunkin', with only $3.80 billion market cap, generates almost 4x less at $2.26 in sales for every outstanding share. How does a company more than half the size of Dunkin' generate almost four times as much in sales?
On the cash flow level, Bloomin' narrowly edges out Dunkin' with 41 cents per share in cash flow versus 38 cents a share. Though Dunkin has Bloomin' beat when it comes to current assets per share, Dunkin has $2.80 a share in current assets while Bloomin' has a negative net asset value. Bloomin' has an earnings yield of 6.2%, while Dunkin' trails at 4%. Dunkin' also lags behind in terms of PE ratio at 24.76 compared to Bloomin' at 16.20.
According to Graham and Dodd's "Security Analysis," asset value and earning power are unrelated. While Bloomin' generates significantly more sales and revenue than Dunkin', Dunkin' is also at a disadvantage in this comparison because of how expensive its stock is compared to Bloomin'. Currently Bloomin' has a book value of $3.38 and has a P/B ratio of 5.01 while Dunkin' has a book value of -69 cents. But Bloomin' falls short with its 2.98% net profit margin when Dunkin' has a net margin of almost 21%.
While Dunkin' did not go public until 2011, in 2012 Dunkin' had EPS of 93 cents while Blooming' went from an EPS of 44 cents when it went public in 2012 to an EPS of 87 cents this year. For Bloomin' you get an annual compounding rate of 18.58% the last four years versus Dunkin' (compounded 5.68% annually the last four years).
Dunkin' has a negative shareholders' equity of 71 cents a share and net earnings of 50 cents a share, while Bloomin' has shareholders' equity of $3.42 a share and net income of 14 cents a share. From a shareholder's position, each share of Dunkin' that you own has a certificate attached to it that pays 50 cents, while Bloomin' only carries 14 cents with it. This means that each Bloomin' share owned is yielding a 4.10% return on shareholders' equity ($0.14 / $3.42 = 4.10%), of which none is retained by the company and 171% (24 cents) is paid out as dividends to shareholders.
