NEW YORK (TheStreet) -- Krispy Kreme Doughnuts (KKD) shares are down 5.8% to $16.59 on Wednesday after reporting adjusted second quarter earnings of 13 cents per diluted share, 2 cents short of analysts expectations.
Revenue for the quarter increased 7% to $120.5 million, ahead of analysts guidance of $118 million.
The company also reported a 2.8% growth in same store sales during the period over the previous year and expects to increase the number of its stores by 10% next year.
TheStreet Ratings team rates KRISPY KREME DOUGHNUTS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their 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, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KKD's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
- KRISPY KREME DOUGHNUTS INC has improved earnings per share by 27.3% 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 ($0.73 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 20.7% when compared to the same quarter one year prior, going from $8.00 million to $9.66 million.
- You can view the full analysis from the report here: KKD Ratings Report
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