For the quarter ended Nov. 3, $114.2 million in revenue missed estimates by $420,000, according to analysts surveyed by Yahoo! Finance. Net income of 16 cents a share beat consensus by a penny. Same-store sales grew 3.7%, the twelfth consecutive quarterly increase.
Mediocre earnings aside, it was Krispy Kreme's underwhelming forecasts which turned Wall Street off. The Winston-Salem, N.C.-based business adjusted its fiscal 2014 guidance to between 60 cents and 63 cents a share, in line with analyst estimates of 63 cents a share.
Fiscal 2015 earnings in the range of 71 cents to 76 cents a share missed a 77-cent consensus. Though sales at domestic stores are expected to continue growing in 2015, the company expects international franchise same-store sales to decline, as the brand has experienced substantial global growth over the last few years.
The doughnut chain had plummeted 18.8% to $20.93 by midday. However, appetite for the stock has been strong through 2013, pushing share price 114% higher.
Halfway through the trading day, 6.3 million shares had changed hands, more than 7 times the three-month average daily trading volume.
TheStreet Ratings team rates Krispy Kreme Doughnuts Inc as a Buy with a ratings score of B. The team has this to say about their recommendation:
"We rate Krispy Kreme Doughnuts Inc (KKD) a BUY. This is driven by some important positives, 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 somewhat disappointing return on equity."
- You can view the full analysis from the report here: KKD Ratings Report