NEW YORK (TheStreet) -- Investors had lost their appetite for doughnuts after the bell on Monday after Krispy Kreme (KKD) reported worse-than-expected results for the quarter ended Nov. 3 and conservative guidance for the full year.
Total sales of $114.2 million, though 6.7% higher than a year earlier, fell short of estimates by $420,000, according to analysts surveyed by Yahoo! Finance.
Third-quarter net income of 16 cents a share beat estimates by a penny. Same-store sales were up 3.7%, the twelfth quarterly increase in a row, boosted thanks to retail price increases.
The Winstom-Salem, N.C.-based business adjusted its fiscal 2014 guidance to between 60 cents and 63 cents a share, the high end of which is 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.
"We are pleased to have increased our top-line at a healthy pace despite the tepid consumer spending environment," said CEO James H. Morgan in a statement. "Most importantly, we demonstrated the attractive leverage opportunities inherent within our business model as evidenced by achieving a higher rate of growth in operating income and adjusted EPS than in revenues."
In after-hours trading, shares plunged 13.8% to $21.17. The stock is up 161.7% since January.
TheStreet Ratings team rates Krispy Kreme Doughnuts Inc as a Buy with a ratings score of B. The team has this to say about its 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