Why Krispy Kreme (KKD) Stock Is Lower In After-Hours Trading

NEW YORK (TheStreet) -- Shares of Krispy Kreme Doughnuts Inc. (KKD)KKD are slumping, down -9.58% to $17.18 in after-hours trading, after the company lowered its adjusted earnings per share guidance for the full year to a range of 69 cents to 74 cents from 73 cents to 79 cents per share.

The retailer and wholesaler of doughnuts today reported financial results for the first quarter of fiscal 2015, ended May 4, 2014. 

The company said system-wide domestic same store sales rose 2.3%, while constant currency international franchise same store sales declined 2.2%.

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Revenues increased 0.8% to $121.6 million from $120.6 million; excluding the effects of refranchising stores, revenues for the quarter rose 2.1%.

Adjusted net income rose 12.2% to $15.8 million, or 23 cents per share, from $14.1 million, or 20 cents per share.

Net income was $9.7 million, or 14 cents per share, compared to $8.0 million, or 11 cents per share, in the first quarter last year.

TheStreet Ratings team rates KRISPY KREME DOUGHNUTS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate KRISPY KREME DOUGHNUTS INC (KKD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 40.45% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • 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 year. We feel that this trend should continue. During the past fiscal year, KRISPY KREME DOUGHNUTS INC increased its bottom line by earning $0.48 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus $0.48).
  • 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 208.8% when compared to the same quarter one year prior, rising from $4.78 million to $14.76 million.
  • KKD's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, KKD has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: KKD Ratings Report

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