DD vs Starbucks Which Is a Smarter Choice?

Both Dunkin' Donuts (DD) and Starbucks are well-known, international coffeehouse chains that have a loyal following of customers. DD is known for its affordable and traditional coffee and baked goods, while Starbucks is renowned for its premium coffee drinks and trendy atmosphere. Investors may be interested in comparing the stocks of these two companies to determine which may be a better investment opportunity. Factors such as financial performance, market share, and future growth potential will influence the decision.

DD or Starbucks?

When comparing DD and Starbucks, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between DD and Starbucks.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. DD has a dividend yield of -%, while Starbucks has a dividend yield of 2.36%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. DD reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Starbucks reports a 5-year dividend growth of 10.35% year and a payout ratio of 68.73%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with DD P/E ratio at 7.62 and Starbucks's P/E ratio at 29.76. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. DD P/B ratio is 2.40 while Starbucks's P/B ratio is -15.03.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, DD has seen a 5-year revenue growth of -0.39%, while Starbucks's is 0.75%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with DD's ROE at 35.12% and Starbucks's ROE at -46.35%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ¥1326.00 for DD and $97.98 for Starbucks. Over the past year, DD's prices ranged from ¥1014.00 to ¥1644.00, with a yearly change of 62.13%. Starbucks's prices fluctuated between $71.55 and $103.32, with a yearly change of 44.40%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.