NEW YORK (
-- Krispy Kreme Doughnut Corporation
) has been upgraded by TheStreet Ratings from hold to buy. 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 199.58% to $5.07 million when compared to the same quarter last year. In addition, KRISPY KREME DOUGHNUTS INC has also vastly surpassed the industry average cash flow growth rate of -3.10%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 105.3% when compared to the same quarter one year prior, rising from $4.47 million to $9.17 million.
- KRISPY KREME DOUGHNUTS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KRISPY KREME DOUGHNUTS INC increased its bottom line by earning $0.10 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.31 versus $0.10).
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 13.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
Krispy Kreme Doughnuts, Inc. operates as a branded retailer and wholesaler of doughnuts, complementary beverages and treats, and packaged sweets. The company has a P/E ratio of 58.2, equal to the average leisure industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Krispy Kreme Doughnut has a market cap of $432.2 million and is part of the
industry. Shares are up 15.3% year to date as of the close of trading on Tuesday.
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