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NEW YORK (TheStreet) -- This past couple of weeks has been full of surprises, primarily on the earnings front, for a number of smaller names that I own or follow.

As a value investor, I don't focus a great deal of attention on a single quarter's release. Unless there's a game-changing event that is contrary to the reasons that I took a position in the first place, it is unlikely that I'd close a position based on a disappointing number. By the same token, it is good to see incremental progress, especially in cases when I've taken a position in "fixer-uppers" or long-shots that are facing challenges and trying a turn-around.

Krispy Kreme Doughnuts


is a great example of a turnaround story. Formerly a high-flying growth company after going public in 2000, the name fell on hard times due to over-expansion, poor management and accounting issues. Lawsuits followed, and the company appeared to be dead in the water. Between 2004 and 2009, it closed 240 stores. After losing money for five consecutive years, Krispy Kreme reported breakeven results in 2010 and has been profitable eight of the past nine quarters.

Last week, the company reported that second-quarter revenue rose 4.3% to $102.1 million, below the $104.5 million consensus estimate. However, earnings came in at 7 cents a share, beating the 5-cent consensus estimate, primarily due to an improvement in operating margins.

Same store sales grew 5.4% at company-owned stores, the 15th consecutive quarterly increase. Perhaps surprisingly to many investors, the company is growing again, and much of that growth is international. Krispy Kreme now has about 390 international franchises (compared to 141 domestic), and has plans to grow to 900 international locations by 2017. While still a work in progress, this company has come a long way.

Restaurant chain



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provided a surprise of its own for the second quarter; the company turned its first-ever quarterly profit from operations. It was a very small profit, just $77,000, a drop in the bucket for a 133 restaurant chain, but even that was a monumental step for the company.

Cosi has struggled mightily since going public 10 years ago, and this is a small glimmer of hope that, under new leadership, the company may be turning around. It will no doubt be a tough road, as the chain has been beset by extremely high operating costs and, in my opinion, a menu that is far too complicated. To management's credit, they've reduced the menu by 15%, which is a step in the right direction. Now they need to make progress in cutting costs.

For now, Cosi has a new lease on life, primarily due to a recent rights offering that raised $12.8 million for the company. While it also increased shares outstanding by about 38%, it was necessary. This is Cosi's last stand in my view. The company has cash on the books and no debt, but will face an uphill battle in the ever-competitive restaurant landscape.

I've been a big fan of the food Cosi serves (although the menu makes my head spin), and believe it has a shot at turning around. Interestingly, there were two Cosi's in our small town about one and a half miles apart. The one that we frequented just closed. While that was disappointing, perhaps the closure demonstrates management's seriousness about trying to repair this company. Why on Earth were there ever two stores so close together in a small town?

Stay tuned. There are, no doubt, more surprises on the horizon.

At the time of publication, the author was long KKD and COSI.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the

Cheap Stocks Web site

, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.