Abstract

Driven Brands Holdings Inc. is scheduled to release quarterly results on February 25, 2026 Pre-Market, with investors focused on how divestiture-related revenue changes, margin mix, and deleveraging translate into earnings per share and guidance for the next quarter.

Market Forecast

Based on the latest forecast dataset, the Street expects Driven Brands Holdings Inc.’s revenue for the to-be-reported quarter at $475.28 million, implying a 16.93% year-over-year decline, while EPS is projected at $0.28, up 54.35% year over year; forecast EBIT stands at $85.41 million, down 3.25% year over year. No explicit margin forecast is embedded in the dataset; last quarter’s gross margin of 45.16% and net margin of 11.36% provide a baseline for comparison.

Main business highlights point to continued revenue concentration in company-operated stores, complemented by royalties, supply and other sales, independently operated stores, and advertising fund contributions. The most promising earnings-leverage stream appears in the higher-margin royalties and related system-fee revenues, with last quarter’s royalties revenue at $50.82 million; the dataset does not provide segment-level year-over-year comparisons within this window.

Last Quarter Review

Driven Brands Holdings Inc. last quarter delivered revenue of $535.68 million (down 9.46% year over year), a gross profit margin of 45.16%, GAAP net profit attributable to shareholders of $60.86 million, a net profit margin of 11.36%, and adjusted EPS of $0.34 (up 30.77% year over year). Sequential profitability strengthened, with net profit rising 27.96% quarter on quarter, underscoring improved operating discipline and mix resilience against a softer top line.

In the business mix, company-operated stores contributed $331.26 million, supply and other totaled $74.31 million, independently operated stores delivered $51.41 million, royalties were $50.82 million, and advertising fund contributions were $27.88 million. The data for last quarter do not include segment-specific year-over-year growth rates, but the composition confirms that company-operated operations remain the primary revenue engine, with fee-based streams providing incremental margin leverage.

Current Quarter Outlook

Company-Operated Stores and System Platform Execution

Company-operated stores remain the largest contributor to quarterly revenue, and investors will parse commentary on unit growth, pricing, ticket mix, and traffic to reconcile the projected top-line contraction with the forecast EPS expansion. Given last quarter’s 45.16% gross margin and 11.36% net margin, even modest improvements in labor productivity, procurement discipline, and shop-level throughput can translate into outsized earnings effects. The sequential 27.96% increase in net profit last quarter suggests that cost control and mix optimization efforts are gaining traction; how that cadence translates in the current quarter will be central to the stock’s immediate reaction.

The divestiture of the international car wash business (IMO), completed on January 28, 2026 for approximately €411 million (about $495 million), reshapes the revenue base and may temporarily depress reported sales year over year, consistent with the forecast revenue decline of 16.93%. Yet the earnings bridge can benefit as operating complexity reduces and management reallocates resources toward segments with clearer unit economics. In this context, investors may look for an update on store-level returns, cadence of network investments, and any early signs of margin capture from portfolio simplification.

Finally, guidance on same-store sales dynamics, promotional intensity, and any pricing actions will be pivotal for assessing sustainability. The EBIT forecast of $85.41 million, down 3.25% year over year, implies that operating income pressure is milder than the revenue contraction, consistent with a thesis of improving mix, cost containment, and potential early benefits from a streamlined footprint. If commentary suggests steady or improving conversion of revenue to EBIT, the Street may place greater weight on EPS trajectory versus headline sales.

Royalties and Supply: Fee-Based Earnings Leverage

Royalties and related fee streams, which generated $50.82 million last quarter, carry structurally higher incremental margins and can provide earnings stability when company-operated revenue fluctuates. If unit growth, ticket mix, and franchisee health hold, the fee base should continue to scale, supporting EPS even in a lower revenue quarter. While the forecast dataset does not include explicit royalty growth, the pattern of EPS outpacing revenue (EPS +54.35% year over year vs. revenue -16.93% year over year) indicates that either lower interest/tax burden or higher-margin mix, or both, are at work.

Supply and other revenue of $74.31 million last quarter augments the platform and can be an additional lever for service consistency and margin capture, particularly when procurement and logistics are run with disciplined inventory turns. In combination, royalties and supply can act as a cushion in periods of top-line reset, especially post-divestiture, enabling the company to preserve, and potentially expand, operating profitability through mix and efficiency improvements. For the current quarter, investors will look for management commentary quantifying how these fee-based and supply revenues contribute to EBIT stability and how they might offset the loss of lower-margin sales from divested operations.

Advertising fund contributions of $27.88 million last quarter are typically pass-through by design, but tighter alignment of system advertising with promotional effectiveness can still improve store-level economics. If the company provides incremental detail on campaigns, lead-generation efficiency, or customer acquisition costs, the market can better assess how the system positioning of service categories supports conversion and customer retention into the spring season. The more clearly management ties advertising deployment to comp trajectories, the more confidence investors will have in forward revenue stabilization.

Key Stock Price Drivers This Quarter

The first determinant is the reconciliation of forecast EPS strength with a weaker revenue print. The Street’s revenue estimate of $475.28 million, down 16.93% year over year, stands next to an EPS estimate of $0.28, up 54.35% year over year. If management details the bridge — including technology, labor, procurement, occupancy efficiencies, and any benefits from exiting lower-margin operations — investors may reward the clarity, especially if the EBIT margin trend looks stable to improving despite sales normalization.

A second driver is balance sheet progress following the sale of the international car wash business for roughly $495.00 million. The company has indicated intent to use proceeds to pay down debt, which should enhance interest coverage and support EPS math even as EBIT is forecast slightly lower. Any quantification of net leverage, cash interest savings, or maturity ladder improvements for 2026–2027 will help investors assess the durability of the projected EPS uplift. Coupled with the prior quarter’s 27.96% sequential increase in net profit, concrete deleveraging milestones would reinforce a narrative of earnings quality improvement.

The third driver is guidance quality and cadence. With no explicit margin guidance in the forecast dataset, the market will focus on whether management provides a clear framework for gross margin and net margin trajectory relative to last quarter’s 45.16% and 11.36%, respectively. Specifics on company-operated store productivity, system fee growth, and supply-chain cost containment will be examined for their implications on sustaining EBIT near the $85.41 million forecast level in subsequent quarters. If the company articulates a consistent path from this quarter’s expected lower revenue base to steadier growth in the back half, the stock reaction could hinge more on forward commentary than on headline results.

A fourth, related consideration is capital allocation and portfolio discipline. Following the international divestiture, investors will watch for any incremental real estate optimization, tuck-in M&A, or refranchising that can sharpen the return profile of the platform. While the dataset does not contain new announcements beyond the IMO transaction within the covered window, the market will likely seek confirmation that capital returned to the balance sheet is being deployed to the highest-return initiatives, with a clear threshold for hurdle rates and paybacks.

Analyst Opinions

Among the identified sell-side updates published within the covered period, the skew is bullish. Stifel Nicolaus reiterated a Buy rating on Driven Brands Holdings Inc. with a $23.00 price target, indicating confidence that cost discipline, portfolio simplification, and execution can support earnings resilience despite near-term revenue normalization. Canaccord Genuity also maintained a Buy rating with a $24.00 price target, framing the path to improved earnings power through mix, margin stabilization, and balance sheet improvement. Within the window reviewed, we identified no bearish calls; accordingly, the majority view is bullish.

From these perspectives, the common thread is that the quality of earnings and cash conversion matter more for near-term valuation than absolute sales growth in a quarter that reflects portfolio changes. The Street’s estimates — revenue at $475.28 million and EPS at $0.28 — already embed a cautious top-line stance, so the determinant for upside or downside appears to be whether management can validate the bridge from lower revenue to higher per-share earnings. If commentary confirms tangible interest expense savings from debt paydown, stable to modestly better store-level profitability metrics, and disciplined capital deployment thresholds, the bullish view argues the stock can look through a temporarily smaller revenue base.

Bulls also highlight that last quarter’s adjusted EPS of $0.34 rose 30.77% year over year while EBIT fell 34.76% year over year, implying material below-the-line support from interest, tax, or share-count dynamics that could persist post-divestiture. With net profit margin at 11.36% and gross margin at 45.16% last quarter, small operational wins can flow meaningfully to EPS. The bullish camp expects the company to translate portfolio focus and deleveraging into steadier earnings, even as reported sales reset, and they view this quarter’s guide as a key validation point for that trajectory.

In summary, consensus builds around a quarter in which revenue resets lower while EPS remains robust, with the balance of opinion leaning bullish on execution, mix, and deleveraging. The durability of that stance depends on the clarity of management’s guidance on margins, the pace of debt reduction following the IMO sale, and visibility into unit-level economics across company-operated and franchised parts of the system. Investors will likely benchmark all commentary against last quarter’s profitability baseline and the current forecast of $85.41 million in EBIT, $475.28 million in revenue, and $0.28 in EPS to gauge whether the company can sustain earnings momentum through 2026.