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Restaurants stocks like DNKN, PZZA and EAT stock are hitting all-time highs -- and now look far too pricey

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Dunkin’ Brands (DNKN)

dunkin-brands-dnkn-stockSome frigid winter weather has been good to Dunkin’ Donuts and its parent Dunkin’ Brands (DNKN). DNKN stock is up 7.1% for the year-to-date and 40% over the last year. True, DNKN is running on some strong numbers, as earnings grew 23% in the most recent quarter on 13% revenue growth. But that’s more than reflected in the DNKN stock price.

DNKN stock has run up to the point that the valuation looks stretched. On a forward earnings basis, Dunkin’ Brands is 10% more expensive than its own five-year average, according to data from Thomson Reuters Stock Reports. DNKN stock is also nearly 40% more pricey than the S&P 500, which doesn’t look all that cheap these days either.

It’s also a bit worrisome that about 6% of the DNKN stock float is sold short. Plenty of folks are betting on a decline, and the rich valuation is making that possibility more likely every day.

Article printed from InvestorPlace Media,

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