NEW YORK (TheStreet) -- Krisy Kreme (KKD - Get Report) will enter the wholesale club channel by stocking its branded packaged ground coffee at a trial number of Sam's Club stores in the Southeast. Sam's Club, a division of Wal-Mart (WMT - Get Report), is a membership-only retail club with 621 warehouses in the U.S. and Puerto Rico.
"The club channel is a natural extension for the brand," said Krispy Kreme Senior Vice President Brad Wall in a statement.
Krispy Kreme has also signed a licensing agreement with brand consultancy firm Brand Central to further develop its coffee products for the wholesale club market.
"These new initiatives are part of our ongoing strategic efforts to significantly build awareness and equity in our coffee program through trial and sales of our existing products in new channels," said Wall.
On Friday, Krispy Kreme shares jumped 7.08% to $22.68, despite no news of note. Share growth leveled off on Monday, closing trading at $22.80. In the year-to-date, shares have surged 143%.
TheStreet Ratings team rates Krispy Kreme Doughnuts as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate Krispy Kreme Doughnuts Inc (KKD) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KKD's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- KKD's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, KKD has a quick ratio of 1.96, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, KKD's share price has jumped by 168.44%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Net operating cash flow has slightly increased to $13.08 million or 3.53% when compared to the same quarter last year. Despite an increase in cash flow, Krispy Kreme Doughnuts' average is still marginally south of the industry average growth rate of 7.13%.
- Krispy Kreme Doughnuts reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, Krispy Kreme Doughnuts reported lower earnings of 29 cents a share vs. $2.33 a share in the prior year. This year, the market expects an improvement in earnings (63 cents vs. 29 cents).
- You can view the full analysis from the report here: KKD Ratings Report
Written by Keris Alison Lahiff.