Dunkin’ Brands Group, Inc. (DNKN) Shares Slip, Investors Watching Closely, Here is Why

Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) shares rose on Wednesday Jan 4 with lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, U.S. stocks opened higher on Wednesday as banking stocks led the Dow Jones Industrial Average closer to the 20,000 milestone.

The Dow DJIA, +0.18% gained 25 points, or 0.1%, to 19,906. The S&P 500 SPX, +0.36% climbed four points, or 0.2%, to 2,262. The Nasdaq Composite Index COMP, +0.50% added 13 points, or 0.3%, to 5,447.

Shares of Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) were downgraded by analysts at Jefferies Group in a note to their investors today. With a rating of Underperform on the stock, the company has a 52-week high of $56.13. As a means of comparison, a number of other analysts have issued reports on the stock in recent days, and Dunkin’ Brands Group, Inc. has earned a consensus one-year price target of $50.73, lower than the opening price of $51.77. Downgrades occur when analysts consider that the future prospects for the security have weakened from the initial recommendation, usually caused by an important and fundamental digression in the company’s operations, future vision or industry.

Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) shares last traded at $52.35, which represents an increase of $0.05 or 0.00 from the previous closing price. Opening at $51.77, they varied from $51.54 and $52.35 throughout the day.

Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) currently has a market cap of 4.80B.

Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) Average Daily Trading Volume

202,593 shares crossed the trading desk yesterday, below the average, out of a total float 86,564,000. lower than normal. Look for trading volume to pick up in the coming days as momentum traders often use swings in trading volume to identify heavy volume accumulation or distribution by institutional investors.

While increased trading for short periods will not mean much will not mean much, however, a trend of heavy trading volume on the buy side over a period of days or weeks sends a positive signal to market traders that institutions may be moving in, so institutional sponsorship is very important.

Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.

These professional investors have substantial teams of analysts researching thousands of stocks, so it is good corroboration to see them taking a postion in a stock you are considering.

Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By tracking the activity of these professional investors—and the moving averages they affect—it allows for traders to make more effective decisions on trades.

With that in mind, Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) now has a 50-day MA of $53.36 and 200-day MA of $49.09. It has traded in a 52-week range between $36.44 – 56.13 and today’s last price is 0.07% lower than the 52 week high of $56.13.

Indeed, earnings growth is among the most important things to look at in regards to stock investing and, accordingly, investors seek companies that have been successful at growing their earnings at least 25% or more for 3 consecutive years.

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