Putting my taste buds aside, because I love a chocolate glazed Kreme-filled doughnut just as much as everyone else, I have to ask, "Is there any real substance behind Krispy Kreme Doughnuts' (NYSE: KKD) earnings?"

The company has been known to move violently following an earnings report, in part because analysts have very little grasp on how rapidly costs can change for the doughnut maker. The other part of its volatility owes to its single-digit per-share price, which makes it a go-to stock for day traders who crave large intraday price swings.

These two factors converged yesterday to create a 26% jump in the value of Krispy Kreme shares following the company's first-quarter report. This quarter marked Krispy Kreme's strongest earnings in seven years, but it also raised a significant amount of red flags that traders seemed to have missed.

"Doughnut" or "do not": you be the judge
First of all, the company made no assurances that input costs are at all under control. The company was able to successfully pass along a price increase to consumers in the first quarter, which primarily drove its revenue to $104.6 million, versus the $96.6 million consensus. But buried in the comments from Krispy Kreme CEO James Morgan was the fact that the average ticket price actually fell! Krispy Kreme may be raking in higher operating margins, but it's losing its larger-ticket customers.

Recurring customers are another challenge for Krispy Kreme. The typical Krispy Kreme customer visits the chain only once a month. Whereas Krispy Kreme sees this as an opportunity -- and don't get me wrong, it is -- I see this as a weakness that will continue to drag on the company. If ticket sales fall in response to a price increase, I find it hard to imagine how the company will attract its occasional customers into the store more often.

Even with this growth revival in Krispy Kreme, I don't think it could hold its ground against some of its closest rivals. Dunkin' Donuts owner Dunkin' Brands is growing sales at a blistering 20% annually, and I'd be shocked if Krispy Kreme investors didn't jump ship for Dunkin' when it IPOs. Even outside the world of doughnuts, who in their right mind would pay 36.6 times trailing-12-month earnings for Krispy Kreme when you can buy Panera Bread (Nasdaq: PNRA), Starbucks (Nasdaq: SBUX), or even micro-cap Einstein Noah Restaurant Group (Nasdaq: BAGL) for a considerably lower premium and still get juicy growth?

Making doughnuts out of doughnut holes
I don't think investors intended to order doughnut holes when they purchased Krispy Kreme stock, but that may have been just what they got. With little earnings substance and input prices remaining a formidable obstacle in the near future, it appears investors are perfectly happy investing in Kreme filling instead of sustainable results.

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The Fool owns shares of Starbucks. Motley Fool newsletter services have recommended Starbucks and Panera Bread. Fool contributor Sean Williams has no material interest in any companies mentioned in this article, but admits to being addicted to Krispy Kreme. You can follow him on CAPS under the screen name TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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 that most assuredly would like a Krispy Kreme glazed doughnut, too.