A Warm Welcome Investors like the Look of Dunkin' Donuts, as Its Stock Soars 47 Percent in First Day of Trading

Daily Herald (Arlington Heights, IL), July 28, 2011 | Go to article overview

A Warm Welcome Investors like the Look of Dunkin' Donuts, as Its Stock Soars 47 Percent in First Day of Trading


Byline: Christina Rexrode Associated Press

NEW YORK It's time to make the money.

Shares of Dunkin' Brands Group Inc. soared nearly 47 percent on Wednesday, their first day of trading, feeding the demand of investors looking to trade in coffee and doughnuts.

Shares closed at $27.85, up $8.85 from the $19 price that Dunkin' Brands set Tuesday night. Dunkin' sold about $423 million worth of shares at $19 apiece.

Most stocks get a one-time pop on their first trading day. Still, Dunkin' Brand's reception indicates that investors are willing to shell out for initial public offerings and not just for the tech companies like LinkedIn and Groupon.

"There's more to the IPO market than just the Internet bubble," said John Fitzgibbon of IPOScoop.com.

Dunkin' Brands, which owns Dunkin' Donuts and the Baskin-Robbins ice cream chain, has said it will use the money from the public offering to pay down debt, in part so that it will be able expand overseas. Dunkin' Brands could raise a bit more if the banks underwriting the IPO decide to buy more shares in the next 30 days.

Dunkin's public offering comes at a time when restaurants are struggling as Americans are cutting back on eating out. But analysts predict that breakfast and snacks the main fare of Dunkin' Donuts will continue to grow over the next decade.

In 2010, Dunkin' Brands' revenue grew 7 percent, partly because of new locations but also because more customers are buying more things per visit. Net income, however, fell 23 percent as expenses rose, including fees paid to the investment firms that own it, costs for refinancing debt, spending on technology, and reserves set aside for potential legal costs. …

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