Dunkin’ Brands (NASDAQ:DNKN) touts itself as the people’s coffee to Starbucks‘ (NASDAQ:SBUX) more pompous positioning. But which of these equities will put you in the top 1%?

Dunkin’ Brands, which owns coffee-and-doughnut purveyor Dunkin’ Donuts and the Baskin-Robbins ice cream chain, went public about a year ago to cut debt and free up capital for expansion. It’s looking to expand from the Northeast, where it gets about 75% of its revenue, to the West Coast and globally.

However, Dunkin has been facing a cost squeeze — dairy prices are increasing, and the company is struggling with the risk that raising prices to cover higher costs will turn off its customers.

Prior to its report Tuesday, analysts were expecting Dunkin to report third-quarter revenue of $159.3 million and adjusted EPS of 25 cents — and according to its report, DNKN beat both expectations. Specifically, Dunkin reported $163.5 million in revenue and 28 cents per share in adjusted EPS.

Dunkin shareholders also got some bad news. While same-store sales at Dunkin’ Donuts are up, that measure barely budged for its Baskin-Robbins outlets. Dunkin’ Donuts’ U.S. comparable store sales increased 6% thanks both to higher prices per transaction and traffic, while Baskin-Robbins’ U.S. comparable store sales inched up a mere 1.7%.

Meanwhile, Starbucks reports its earnings Thursday and analysts are predicting a slight increase in sales and adjusted EPS. Specifically, Starbucks is expected to report $2.95 billion in revenue, $90 million more than in 2010, and adjusted EPS of 36 cents — three cents above its 2010 performance.

In the previous quarter, SBUX knocked it out of the park. That’s when it reported a 33% profit spike to $887.4 million on a 12% revenue rise to $2.93 billion. Not only that, but Starbucks reported EPS of 36 cents — four cents more than analysts expected.

Should you imbibe venti soy lattes or suck down a large cup of Dunkin’ Joe? Stick with the Dunkin’. Here’s why:

• Dunkin’ Brands: Slow growth, small margins; cheap stock. DNKN’s sales have increased 7.3% in the past 12 months to $595 million, while net income dropped 23.3% to $19 million — yielding a 3.19% net profit margin. Its price/earnings-to-growth ratio of 0.72 (where a PEG of 1.0 is considered fairly priced) is pretty cheap on a forward P/E of 24.67 and expected earnings growth of 34.1% to $1.18 in 2012.
• Starbucks: Decent growth, healthy margins; expensive stock. Revenues for SBUX have increased 9.5% in the past 12 months to $11.51 billion, while net income jumped 142% to $1.17 billion — yielding a 10.15% net profit margin. Its PEG ratio of 1.43 is expensive on a P/E of 27.87 and expected earnings growth of 19.47% to $1.81 in 2012.

Starbucks makes fine coffee, but its earnings growth does not seem to justify the high valuation for SBUX. DNKN stock looks cheap if its 2012 earnings growth forecast is right. Tuesday’s report boosts Dunkin’s credibility when it comes to exceeding expectations.

As of this writing, Peter Cohan did not own a position in any of the aforementioned stocks.