Krispy Kreme Doughnuts Earnings: Investors Happy on a Sugar High

Krispy Kreme Doughnuts Inc. (NYSE:KKD) reported net income above Wall Street’s expectations for the third quarter. Krispy Kreme Doughnuts and its subsidiaries are engaged in the sale of doughnuts and related items through company-owned stores.

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Krispy Kreme Doughnuts Inc. Earnings Cheat Sheet

Results: Net income for Krispy Kreme Doughnuts Inc. rose to $5 million (7 cents per share) vs. $4.7 million (7 cents per share) in the same quarter a year earlier. This marks a rise of 6.9% from the year-earlier quarter.

Revenue: Rose 8.5% to $107.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Krispy Kreme Doughnuts Inc. reported adjusted net income of 12 cents per share. By that measure, the company beat the mean estimate of 8 cents per share. It fell short of the average revenue estimate of $111.4 million.

Quoting Management: President and Chief Executive Officer James H. Morgan commented: “We commend the entire Krispy Kreme family for their accomplishments in the third quarter. Their efforts enabled us to deliver extraordinary results, including healthy revenue gains, robust same store sales, and substantial growth in both adjusted net income and operating cash flow. We have now generated positive same store sales for an impressive sixteen consecutive quarters. Even more important, our Company Stores segment has emerged as a strong contributor to our overall profitability due to the solid foundation that has been laid over the past four years by our operations team and those who support them, as well as the outstanding effort of our marketing group.” Morgan continued, “While we are pleased with our near-term achievements, our management focus is always centered on how best to position ourselves over the long term. Our decision making process and capital deployment is designed to build on Krispy Kreme’s 75-year legacy so that we can create sustainable long-term value for our shareholders. By executing on our strategies, we are confident that we can continue to successfully grow the Company while at the same time realizing our brand mission to touch and enhance lives through the joy that is Krispy Kreme.”

Key Stats:

Revenue has increased for four consecutive quarters. Revenue increased 4.3% to $102.1 million in the second quarter. The figure rose 3.7% in the first quarter from the year earlier and climbed 11.2% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has beaten estiamtes for two quarters in a row. In the second quarter, it topped expectations with net income of 7 cents versus a mean estimate of net income of 5 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 6 cents a share to 8 cents over the last ninety days. Over the past three months, the average estimate for the fiscal year has climbed from 24 cents per to share to 42 cents.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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