We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Nothing hurts quite like biting into a hot glazed donut only to find out the sugar rush doesn’t last. That’s exactly how investors in Krispy Kreme ((DNUT - Free Report) ) are feeling these days. The iconic donut maker may have brand recognition that rivals Coke or McDonald’s, but Wall Street cares about earnings trends, and right now, the frosting is starting to melt. Looking at the numbers, this one deserves a highlight as today’s Bear of the Day.
For the uninitiated, Krispy Kreme offers doughnut experiences through hot light theater and fresh shops, delivered fresh daily branded cabinets and merchandising units within grocery and convenience stores, quick service restaurants, club memberships, drug stores, and digital channels. It also operates Krispy Kreme company-owned shops and franchise shops.
Over the last couple of months, analysts have been dialing back expectations for Krispy Kreme’s bottom line. In fact, the Zacks Consensus Estimate for the current year has slipped notably, coming from an expected loss of 16 cents to 27 cents. That helped push the stock down to a Zacks Rank #5 (Strong Sell). That’s never a good sign. The culprit? Rising costs and margin pressure. While revenue has shown decent growth thanks to store expansion and “hubs with spokes” distribution, labor inflation, higher commodity prices, and international weakness have eaten into profitability. Last quarter’s EPS missed the mark, highlighting just how thin margins have become.
On the surface, donuts are a simple business with inputs of flour, sugar, oil, and glaze. But in this inflationary environment, those inputs aren’t so sweet. Pair that with a debt load from re-IPO expansion plans and you’ve got a company working hard just to tread water. Even though management has leaned on price increases and co-branded deals with big-box retailers, it hasn’t been enough to keep earnings estimates from drifting lower.
Things are looking up for next year, with estimates now calling for the loss to narrow to 7 cents. The Consumer Products – Staples industry I sin the Bottom 27% of our Zacks Industry Rank. There are a couple of names within the industry that are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) stocks ARKO ((ARKO - Free Report) ) and Village Farms International ((VFF - Free Report) ).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Bear of the Day: Krispy Kreme (DNUT)
Nothing hurts quite like biting into a hot glazed donut only to find out the sugar rush doesn’t last. That’s exactly how investors in Krispy Kreme ((DNUT - Free Report) ) are feeling these days. The iconic donut maker may have brand recognition that rivals Coke or McDonald’s, but Wall Street cares about earnings trends, and right now, the frosting is starting to melt. Looking at the numbers, this one deserves a highlight as today’s Bear of the Day.
For the uninitiated, Krispy Kreme offers doughnut experiences through hot light theater and fresh shops, delivered fresh daily branded cabinets and merchandising units within grocery and convenience stores, quick service restaurants, club memberships, drug stores, and digital channels. It also operates Krispy Kreme company-owned shops and franchise shops.
Over the last couple of months, analysts have been dialing back expectations for Krispy Kreme’s bottom line. In fact, the Zacks Consensus Estimate for the current year has slipped notably, coming from an expected loss of 16 cents to 27 cents. That helped push the stock down to a Zacks Rank #5 (Strong Sell). That’s never a good sign. The culprit? Rising costs and margin pressure. While revenue has shown decent growth thanks to store expansion and “hubs with spokes” distribution, labor inflation, higher commodity prices, and international weakness have eaten into profitability. Last quarter’s EPS missed the mark, highlighting just how thin margins have become.
Krispy Kreme, Inc. Price and Consensus
Krispy Kreme, Inc. price-consensus-chart | Krispy Kreme, Inc. Quote
On the surface, donuts are a simple business with inputs of flour, sugar, oil, and glaze. But in this inflationary environment, those inputs aren’t so sweet. Pair that with a debt load from re-IPO expansion plans and you’ve got a company working hard just to tread water. Even though management has leaned on price increases and co-branded deals with big-box retailers, it hasn’t been enough to keep earnings estimates from drifting lower.
Things are looking up for next year, with estimates now calling for the loss to narrow to 7 cents. The Consumer Products – Staples industry I sin the Bottom 27% of our Zacks Industry Rank. There are a couple of names within the industry that are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) stocks ARKO ((ARKO - Free Report) ) and Village Farms International ((VFF - Free Report) ).