Krispy Kreme Doughnuts

Krispy Kreme Doughnuts (KKD - Snapshot Report) sees the Zacks Consensus Estimate move higher and gets good price appreciation with positive earnings surprises. The stock is a Zacks #1 Rank (Strong Buy).

Company Description

Krispy Kreme Doughnuts, operates as a branded retailer and wholesaler of doughnuts, complementary beverages and treats, and packaged sweets. KKD sells approximately 20 varieties of doughnuts, including various Original Glazed doughnuts, as well as coffees, espresso, cappuccino, hot chocolate, frozen drinks, juices and other beverages.

Earnings Estimates Increase

Earnings estimates for the April 2012 quarter have moved higher recently. The Zacks Consensus Estimate of $0.07 increased to $0.08 in January, an increase of 14%.

The same is true of the July 2012 quarter which indicates sustained growth in earnings. Growth in earnings is something that most aggressive growth investors search for.

Earnings Surprises Have Helped

A string of three straight earnings surprises have resulted in nice price appreciation. A big beat of $0.04 in the January 2011 quarter netted a 30% move in the stock. That beat was 44% ahead of expectations. The July 2010 quarter also saw a significant move in the stock, up 24%, after posting $0.04 in earnings when the Zacks Consensus Estimate was calling for a loss of a penny.

Be Mine

The company recently announced that it is offering "sweet one-of-a kind treats" to share with your special Valentine. Nothing says Valentine's Day like a doughnut with sprinkles on it.

Another, potentially more attractive option is to purchase a dozen doughnuts that come with a dozen Valentine cards. The real sweetness of this deal is that each card is good for one doughnut of your choice. It's the gift that keeps on giving.

Valuations

KKD trades at a premium to industry averages, with the conservative measure of price to book among the largest of premiums. 5x book value suggests that the company has very few or very valuable assets, or quite likely a combination of both. The industry average for price to book is 2.4x.

The Chart

The recent price action has shown a key move above the 200 day moving average line. Over the last 3 months, the stock has moved higher by almost 12%.

Brian Bolan is an Aggressive Growth Stock Strategist for Zacks.com.

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Read the full analyst report on KKD