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Reducing prices in international markets and marketing towards youth would make Baskin Robbins ice cream more competitive and drive revenues upward. The most significant threat towards Baskin Robbins and the success of the company is the negative association with sugar and dairy. Health industries are cracking down in terms of regulation and awareness towards unhealthy foods, which could be detrimental towards Baskin Robbins high sugar, highly addictive ice creams. The availability of ice creams and ice cream alternatives is another threat towards the brand, with companies like Ben and Jerry’s, Breyers,
Halo Top, and Arctic Zero developing new creations that appeal to health-conscious consumers. Despite the threats towards Baskin Robbins, the company can still succeed if it capitalizes on its opportunities in growth, pricing strategy, and product development.Portfolio analysisAccording to MacroTrends, a price-to-earnings ratio (PE) is a simple way to assess whether a stock is over or undervalued and is the most widely used valuation measure. The PE is calculated by taking the latest closing price and dividing it by the most recent earnings-per-share (EPS) number. Because Baskin Robbins is owned by Dunkin Brands, its PE ratio is found for Dunkin Brands, not the ice cream retailer specifically. The PE ratio for Dunkin Brands as of November 15, 2018 is 25.30. This number is normal considering the average market market PE ratio is 20-25 times earnings. A profit-to-earnings ratio of 25.30 means that investors are willing to pay $25.30 for $1 of current earnings. Dunkin Brands’ PE ratio indicates that investors anticipate higher growth in the future, however, this number does not represent Baskin Robbins solely. In 2018, Dunkin Brands announced that the company plans to spend $100 million over the next year to modernize its stores and strengthen its technology infrastructure. The investment,which is currently being used, has increased its royalty revenues by 4.4%. While revenue increases look good on paper, it doesn’t include Baskin Robbins involvement. From 2017 to 2018, Baskin Robbins comparable store sales fell 0.4% due to a decline in foot traffic. From 2014-2017, Baskin Robbins international revenues fell from $120 million to $115 million. United States revenues increased in the same time frame from $46 million to $49 million. When looking at Dunkin Brands overall stock value, the company has gone from trading at 28 dollars per share in 2011, to 72 dollars per share in 2018. The stock has a slow and steady positive trend.Because Baskin Robbins is a franchise system, it requires significant investments to open up a new location. Detailed estimates of Baskin-Robbins franchise costs (below) are based on item 7 in its Franchise Disclosure Document.