The balance sheet remains strong; KKD ended the quarter with $74 million in cash and just $24 million in debt. KKD Cash and ST Investments data by YCharts The company also raised earnings guidance for next year and is now expecting between 59 and 63 cents, up from 53 to 57 cents. The company ended the quarter with a total of 773 stores, 532 of which are international. Management believes that there's more growth on the horizon, projecting a total of 1,300 stores (900 international, 400 domestic) by January 2017.
Clearly, this is a new and improved Krispy Kreme, a far cry from the company that nearly imploded years ago. The stock is now trading at about 24 times 2015 consensus estimates, which may appear a bit rich, but perhaps not if the company can deliver on its growth plans. And therein lies the conundrum for the value investor who buys turnaround stories; when do the lines of growth and value cross? I've typically sold too early in such situations in the past, but I am holding onto this one at least for now. At the time of publication, Heller was long KKD.Follow @JonMHellerCFAThis article is commentary by an independent contributor, separate from TheStreet's regular news coverage.