Image source: Krispy Kreme Doughnuts.

There's nothing quite like a sweet, warm doughnut fresh out of Krispy Kreme's (NYSE:KKD) ovens. But on Tuesday, the doughnut-maker treated shareholders to a bitter 19% plunge following the release of its fiscal third-quarter 2014 financial results.

That's not to say the numbers were terrible; quarterly revenue rose a modest 6.7% to $114.2 million, while adjusted net income jumped 33.8% to $11.2 million, or $0.16 per share. By contrast, analysts were expecting adjusted earnings of only $0.15 per share on sales of $110.3 million.

Here's what happened
Despite the beat, however, Krispy Kreme adjusted the lower end of its fiscal 2014 earnings guidance by only a penny, resulting in a new range of $0.60 to $0.63 per share. What's more, Krispy Kreme provided preliminary fiscal 2015 guidance for adjusted earnings per share between $0.71 and $0.76 per share.

That's all well and good, but the midpoints of both ranges fell short of analysts' estimates for 2014 and 2015 earnings of $0.63 and $0.73 per share, respectively.

Even then, the guidance miss wasn't that bad, right? After all, the company's guidance ranges do leave a chance of living up to investors' high expectations -- never mind that there appear to be no significant signs of pervasive long-term issues in Krispy Kreme's actual business.

So if you're searching for an explanation for today's plunge, then look no further than Krispy Kreme's lofty valuation. Remember, even after today's drop, shares are currently trading around 63 times last year's earnings and 26 times next year's estimates. As a result, it's evident the stock was priced for perfection, and our fickle market was looking for nothing less with Krispy Kreme's quarterly results.

Time to buy?
Does that mean it's time to buy shares of Krispy Kreme?

Well, maybe. But don't go too crazy just yet.

Let's do a little back-of-the-napkin math, shall we?

Taking the midpoint of both Krispy Kreme's fiscal 2014 and 2015 guidance means it's expecting to grow earnings by roughly 20% next year, So -- barring the possibility Krispy Kreme is simply planning to under-promise and over-deliver here -- shares do still look a tad rich at current levels.

But let's also not forget management's reminder they still have a $50 million share repurchase authorization at their disposal -- the effectiveness of which I happened to question back in July. Considering this pullback puts shares back near July's levels -- and noting Krispy Kreme has further grown both revenue and earnings nicely since then -- investors should be happy management seems to have no intention of haphazardly executing those repurchases.

As a result, while I won't be rushing out to buy shares of Krispy Kreme right now, I think investors would be wise to at least add the stock to their watchlists. If today's downward momentum continues into the near future, the plunge could very well turn out to be a fantastic opportunity for patient long-term investors to step in.

Fool contributor Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.