Why Krispy Kreme Shares Got Dumped

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  ) were looking stale today, falling by as much 15% after a disappointing second-quarter earnings report.

So what: The doughnut-and-coffee chain saw strong sales growth, but earnings came up short. As shares had already been bid up so much this year, the market saw this as a warning sign. Adjusted per-share profits bumped up from $0.12 to $0.14, missing estimates of $0.16. Revenue was up 10% to $112.7 million, ahead of expectations of $111.9 million, while same-store sales grew by an impressive clip, at 10%. Krispy Kreme left its full-year EPS guidance unchanged at $0.59-$0.63, though that was below projections at $0.64. The company also said comparable sales slowed in August, after the reporting period ended.

Now what: This was not a terrible quarter by any means, and same-store sales growth of 10% would make most retailers jealous. However, Krispy Kreme's share price has tripled in the past year as its turnaround strategy has taken hold after over-expanding several years ago. Still, with earnings projected to come in below estimates this year, and analysts expecting only modest growth next year, the share price seems like it has gotten a little overheated. I wouldn't be surprised to see this slide continue.

Tax increases that took effect at the beginning of 2013 affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report, "How You Can Fight Back Against Higher Taxes," the Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.



Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2617947, ~/Articles/ArticleHandler.aspx, 8/28/2014 5:08:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement