Why Krispy Kreme Doughnuts Shares Were Glazed, Temporarily

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Krispy Kreme Doughnuts (NYSE: KKD  ) , donut maker extraordinaire, shed as much as 10% after reporting its fourth-quarter earnings results. However, shares have retraced much of their losses and are down less than 4% as of this writing.

So what: For the quarter, Krispy Kreme reported a robust 16% increase in revenue, to $118.1 million over the year-ago period, as adjusted net income soared 85%, to $0.11 per share. Wall Street had also been expecting $0.11 in EPS, but was looking for only $116.5 million in revenue. Most importantly, same-store sales growth of 7.5% shows continued emphasis on driving traffic and higher ticket sales. Looking ahead, Krispy Kreme forecast full-year 2014 EPS of $0.53-$0.57, which is noticeably higher than the $0.52 the Street expected, but not nearly high enough for investors who had bet on a fatter figure.

Now what: All told, this was an exceptionally good report from Krispy Kreme, and it probably didn't deserve the 10% lashing it took earlier in the session. I'm not a huge fan of the run its share price has had, and feel that investors may have become a bit exuberant with its outlook; however, Krispy Kreme's management continues to rely on menu innovation, signature coffee blends, and expansion into emerging markets as its keys to growing the business. From a bystander's viewpoint, this was a solid quarter.

Craving more input? Start by adding Krispy Kreme Doughnuts to your free and personalized Watchlist so you can keep up on the latest news with the company.

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  • Report this Comment On March 18, 2013, at 7:44 PM, thunderboltnova wrote:

    The problem with Krispy Kreme is they lie about their earnings and never are punished for it. I can remember when they lied about growing 20% and the owners daughter was selling left and right.

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