Krispy Kreme, Inc. ($DNUT) Earnings (Q2 FY22)

 Krispy Kreme, Inc. ($DNUT) Earnings and Opinion:


Krispy Kreme is a company in the Consumer Defensive sector and operates in the Grocery Stores industry. The company operates through an omni-channel business model to provide doughnut experiences and produce doughnuts. Krispy Kreme was founded in 1937 and is currently headquartered in Charlotte, North Carolina. The company was first traded on the stock market in 2021.

Krispy Kreme Earnings Results:

  • Revenues of $375M missing expectations of $386M
  • Gross Profit of $275M missing expectations of $286M
  • Adjusted EBITDA of $47M missing expectations of $52M
  • Adjusted EPS of $0.08 missing expectations of $0.09
Opinion:
Krispy Kreme dropped by over 10% after reporting earnings before the market opened this morning. All of the top line metrics missed expectations and all margins missed expectations. Guidance was slashed in all of the categories as well. This is a really bad look for Krispy Kreme, as they had a pretty good rally riding for them. A lot of the bad misses were blamed by the company operating in the consumers favors and giving some significant discounts. Just like every other company, the company seems to be having a difficult time with economic pressures. Things are starting to ease a little bit, thankfully, and this is giving optimism for the company to get back on the growth track. As far as valuation goes, the company has a P/E ratio of 42.53 which is almost triple the industry average of 16. The P/S ratio sits a 1.31 which is lower than the industry average. The thing that worries me the most is the current ratio of 0.30, which means they need a lot more cash to even pay back its current liabilities. The cash is overwhelmingly outweighed by the debt, which is a bad sign for a company lingering with profitability. The only thing that looks promising, is the growth seems to be increasing and can hopefully lead to growing revenues. My opinion would be to fully avoid this stock. I currently own a small position in this company, but am looking to sell out of it. I see that the company is way overvalued and that they have a lot of worry with paying off debts. I would avoid this stock at all costs and don't be fooled by the dividend here. The upside is limited and a lot of things could go wrong is nothing is fixed soon.


*Information from Yahoo Finance, CMLVIZ, Consensus Gurus

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