Starbucks vs Dunkin Donuts: Which is better?

Marketability. 

There are several market ratios that are typically used to compare the marketability of companies. The Earnings per share, Price Earnings ratio and Dividend Yield Ratio will be used for this comparison. 

Earnings per Share. (EPS) 

For Starbucks, the earnings per share for the fiscal year 2019 is $2.92 while that for Dunkin Donuts is also $2.92. 

EPS indicates a company’s profitability to the investor thus the higher the EPS, the better for the investor. Both companies have a similar EPS meaning they have the same rate of profitability to the investor. 

The Price/ Earnings ratio (P/E) 

Calculated by dividing the current price of the stock by the earnings per share. 

For Starbucks this would be: 

Current stock price = 77.99, EPS = 2.92 

So P/E ratio = 77.99/2.92 = 26.71 

For Dunkin: 

Current stock price = 63.87, EPS = 2.92 

So P/E ratio = 63.87/ 2.92 = 21.87 

P/E ratio helps to determine the relative value of a company. A low P/E ratio means the investors are earning more for their investment as is the case for Dunkins. However, this may also mean that investors are willing to pay more for the stock in the hope of future growth expectations. 

Dividend Yield ratio is calculated by dividing dividend payments per year by market price of the stock. 

For Starbucks; 

dividends paid = $1.49, Current stock price = 77.99 

Dividend yield = 1.49/77.99 = 0.0191 or 1.91%. 

Dunkins; 

dividends paid = $1.50, Current stock price = 63.87 

Dividend yield = 1.50/63.87 = 0.0235 or 2.35% 

This ratio shows how much dividends investors can expect to be paid for their stock and the higher the better for the investor. In this case, Dunkins has a higher dividend yield at 2.35% making it better than Starbucks at 1.91%.