Why Krispy Kreme Shares Are Rising

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 glazed-doughnut specialist Krispy Kreme Doughnuts (NYSE: KKD  ) popped 17% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock has soared over the past year on rebounding fundamentals, and today's first-quarter results -- profit increased 33% on 11% revenue growth -- coupled with upside guidance suggest that things are only getting better. In fact, same-store sales jumped 11.4% over the year-ago period, representing its 18th straight quarterly increase, giving investors plenty of confidence in management's ability to grow profitably long-term.

Now what: Management now sees full-year adjusted EPS of $0.59 to $0.63, up from a prior view of $0.53 to $0.57 and also ahead of Wall Street's estimate of $0.55. "We continue to believe we are in the very early stages of developing Krispy Kreme's long-term potential as we continue to execute on our strategic priorities, demonstrate our capability to grow same-store sales, generate significant operating cash flow, and increase earnings over the long term," said Chairman and CEO James Morgan. Of course, with the stock now up about 190% over the past year and trading at a forward P/E of about 25, much of that operating momentum might already be baked into the price.  

Interested in more info on Krispy Kreme? Add it to your watchlist.

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