Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, doughnut specialist Krispy Kreme Doughnuts (NYSE: KKD ) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Krispy Kreme's business and see what CAPS investors are saying about the stock right now.
Krispy Kreme facts
|Headquarters (Founded)||Winston-Salem, N.C. (1937)|
|Market Cap||$599 million|
|Trailing-12-Month Revenue||$374.4 million|
Chairman/CEO James Morgan
CFO Douglas Muir
|Return on Equity (Average, Past 3 Years)||3.1%|
|Cash/Debt||$24.7 million / $34.8 million|
McDonald's (NYSE: MCD )
Starbucks (Nasdaq: SBUX )
Tim Hortons (NYSE: THI )
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 50% of the 783 members who have rated Krispy Kreme believe the stock will underperform the S&P 500 going forward. These bears include All-Stars Chemdawg and TSIF, both of whom are ranked in the top 10% of our community.
Just last month, Chemdawg touched on Krispy Kreme as an unappetizing pick:
donuts are not really a big priority when the house is getting repoed and you haven't had a job in a few years ... and this is a one trick pony ... retail is in a bit of a bubble and the good earnings are unsustainable going forward ... and they have a P/E of over 50.
In fact, Krispy Kreme currently trades at a particularly lofty P/E of 80.6. That represents a clear premium to rivals McDonald's (17.4), Starbucks (25.5), and Tim Hortons (12.4).
CAPS All-Star TSIF warned Fools about getting too excited over the recent market-thumping quarter:
Krispy Kreme announced they had their highest profit in seven years at $0.13 per share and handily beat analysts estimates. I find it hard to believe, however that the earnings or the pop will be sticky moving forward. Krispy Kreme has been break even on store count opening and closing company owned stores and franchise stores at a fairly even rate. Last quarter they booked a loss and indicated that ingredient prices were rising and they would probably have to raise prices. ... Higher gas prices are reducing disposable income and reducing driving, both decreasing the potential store traffic, especially if prices rise. ...
Cash flow is decent and debt manageable, but I can't see this spike holding. Overall, a good report for Krispy Kreme, but investor loyalty will fade as volume returns to normal and the sugar rush is over.
What do you think about Krispy Kreme, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!