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Krispy Kreme (DNUT)
NASDAQ:DNUT
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Krispy Kreme
(NASDAQ:DNUT)
Rating:54Neutral
Price Target:
$3.00
▲(4.90%Upside)
Positive Factors
Leverage Reduction
Actions are being taken to reduce leverage and reduce capital intensity, notably most international markets could be considered for conversion to a franchise model.
Product Strategy Shift
On demand, DNUT highlighted the value-focused customer environment and shift in product approach to emphasize its original glazed donuts and everyday value.
Negative Factors
Divestiture Impact
The company's net sales were adversely impacted by the Insomnia Cookies divestiture and lower in-store transaction volumes.
Expansion Pause
What was expected to be a key driver of the growth story (the MCD partnership) now on pause.
Guidance and Forecasting
1Q missed a lowered bar, 2Q guided lower, and 2025 guidance pulled.
Krispy Kreme (DNUT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$488.49M
Dividend Yield4.89%
Average Volume (3M)5.87M
Price to Earnings (P/E)238.5
Beta (1Y)1.01
Revenue Growth-6.55%
EPS Growth53.81%
CountryUS
Employees21,000
SectorConsumer Cyclical
Sector Strength77
IndustryGrocery Stores
Share Statistics
EPS (TTM)-0.05
Shares Outstanding170,800,000
10 Day Avg. Volume2,746,357
30 Day Avg. Volume5,870,090
Financial Highlights & Ratios
PEG Ratio-1.68
Price to Book (P/B)0.41
Price to Sales (P/S)0.00
P/FCF Ratio-6.22
Enterprise Value/Market Cap3.66
Enterprise Value/Revenue0.26
Enterprise Value/Gross Profit2.32
Enterprise Value/Ebitda2.46
Forecast
1Y Price Target
$4.23Price Target Upside47.90% Upside
Rating ConsensusHold
Number of Analyst Covering6
Krispy Kreme Business Overview & Revenue Model
Company DescriptionKrispy Kreme, Inc. (DNUT) is an American multinational doughnut company and coffeehouse chain, renowned for its signature hot, glazed doughnuts and diverse range of sweet treats. Established in 1937, Krispy Kreme operates across multiple sectors including retail, wholesale, and e-commerce, offering its products through a network of company-owned stores, franchises, and partnerships with retail and foodservice channels globally. The brand is synonymous with its 'Hot Light' experience, signaling freshly made doughnuts, and is celebrated for its innovation in doughnut flavors and seasonal offerings.
How the Company Makes MoneyKrispy Kreme generates revenue through several key streams: direct retail sales through its company-owned and franchise locations, wholesale distribution to grocery and convenience stores, and online sales. The company benefits from strategic partnerships with retailers and foodservice providers, which expand its market reach and enhance brand visibility. Additionally, Krispy Kreme leverages its brand equity by offering branded merchandise and leveraging licensing agreements. The company also focuses on marketing initiatives, such as its popular 'Hot Light' promotions, to drive in-store traffic and repeat purchases. Seasonal and limited-time offerings further boost sales by creating urgency and interest among consumers.
Krispy Kreme Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -33.95%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of progress and challenges. While Krispy Kreme is expanding internationally and improving operational efficiencies, it faces significant challenges with its McDonald's partnership and financial pressures from declining organic revenue and cybersecurity impacts. The company's focus on deleveraging and strategic growth is counterbalanced by the need to pause expansion efforts and reassess strategies.Q1-2025 Updates
Positive Updates
Expansion in International Markets
Krispy Kreme opened in Brazil with $100,000 in sales in the first two days, surpassing the France launch in 2023. The company is considering refranchising operations in Australia, New Zealand, Japan, Mexico, the UK, and Ireland to strengthen its capital-light international franchise growth.
Cost Reduction and Operational Efficiency
Krispy Kreme has begun outsourcing fresh doughnut delivery, expecting 15% of the network to be outsourced by May, with further plans to fully outsource US logistics by mid-next year. This move has resulted in excellent service rates and predictable costs.
New Marketing Campaigns and Product Innovations
Krispy Kreme is launching a multimedia marketing campaign on June 6, National Donut Day. The company has seen success with new product innovations like the Fruity Pebbles glaze, which sold out daily in April.
Increase in Points of Access
The company has added nearly 100 new cabinets to its DFD channel, bringing the total to more than 600. Krispy Kreme is also expanding availability through new partnerships with Costco and a pilot with Sam's Club.
Improvement in Employee Turnover
Krispy Kreme has improved employee turnover by over 30% year over year, supported by new role-based training, onboarding programs, and an incentive program.
Negative Updates
Challenges with McDonald's Partnership
After initial marketing, demand for Krispy Kreme products at McDonald's locations dropped below expectations. Krispy Kreme and McDonald's have paused further expansion to reassess the deployment schedule and improve profitability.
Decline in Organic Revenue
Organic revenue declined by 1% due to consumer softness in a challenging macro environment, resulting in a Q1 net revenue of $375.2 million.
US Retail Segment Weakness
The US segment saw an organic revenue decline of 2.6% due to consumer softness and a planned reduction of discount days. Adjusted EBITDA for the US dropped to $15.9 million.
Cybersecurity Impact and Financial Challenges
The 2024 cybersecurity incident resulted in $5 million of operational inefficiencies. Adjusted EBITDA was $24 million with a margin of 6.4%, affected by the cybersecurity impacts and costs from US expansion.
Withdrawal of Full-Year Outlook
Due to macroeconomic softness and uncertainty around the McDonald's partnership, Krispy Kreme has withdrawn its prior full-year outlook.
Discontinuation of Quarterly Dividend
Krispy Kreme has decided to discontinue the quarterly dividend to redirect capital towards debt repayment.
Company Guidance
During the Krispy Kreme First Quarter 2025 Earnings Call, the company outlined several strategic initiatives aimed at driving profitable growth and improving financial flexibility. The company is focusing on its long-term goal of reaching 100,000 points of access, emphasizing profitable U.S. expansion and capital-light international franchise growth. In Q1 2025, Krispy Kreme reported net revenue of $375.2 million and an adjusted EBITDA of $24 million with a margin of 6.4%. The U.S. segment saw an organic revenue decline of 2.6%, with an average revenue per door per week (APD) of $587. Internationally, organic revenue grew by 1.5%, led by strong performance in Canada. The company is also pursuing a refranchising strategy in certain international markets, aiming to deleverage the balance sheet and strengthen financial stability. For Q2, Krispy Kreme expects revenue between $370 and $385 million and adjusted EBITDA of $30 to $35 million. The company also announced the discontinuation of its quarterly dividend to prioritize debt repayment.Krispy Kreme Financial Statement Overview
Summary
Krispy Kreme exhibits solid revenue generation and gross profit margins, but profitability remains inconsistent, impacted by negative EBIT and fluctuating net income. The balance sheet indicates a leveraged position with high debt levels, posing potential risks. Cash flow management is an area of concern due to negative free cash flow, despite positive operating cash flows. The company needs to address these financial challenges to ensure sustainable growth and financial stability.Income Statement
Krispy Kreme has shown a steady increase in total revenue over the years, but the latest report shows a minor decline in revenue compared to the previous year. The gross profit margin is strong, indicating efficient management of production costs. However, the company has struggled with consistent profitability, as shown by fluctuating net income and negative EBIT in the latest period.65
Positive
Balance Sheet
The balance sheet reveals a relatively high debt-to-equity ratio, suggesting a leveraged position. Although stockholders' equity has been stable, the company's total liabilities remain significant, which could pose risks. The equity ratio is moderate, indicating a balanced asset financing structure through equity.60
Neutral
Cash Flow
Cash flow analysis shows a consistent challenge in generating positive free cash flow, with recent periods reflecting negative figures. Operating cash flow has been positive, but the company has faced high capital expenditures. The free cash flow to net income ratio indicates potential cash flow challenges in supporting net income.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Mar 2023 | Mar 2022 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.67B | 1.69B | 1.53B | 1.38B | 1.12B | Gross Profit |
| 1.26B | 476.37M | 1.12B | 1.03B | 811.13M | EBIT |
| -8.73M | 13.14M | 28.98M | 41.10M | 4.28M | EBITDA |
| 212.71M | 135.24M | 141.09M | 136.94M | 78.15M | Net Income Common Stockholders |
| 3.10M | -37.92M | -8.78M | -14.84M | -60.94M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 28.96M | 38.19M | 35.37M | 38.56M | 38.51M | Total Assets |
| 3.07B | 3.24B | 3.15B | 3.15B | 3.06B | Total Debt |
| 1.35B | 1.40B | 1.24B | 1.18B | 1.59B | Net Debt |
| 1.32B | 1.36B | 1.20B | 1.14B | 1.56B | Total Liabilities |
| 1.91B | 1.98B | 1.85B | 1.81B | 2.21B | Stockholders Equity |
| 1.13B | 1.17B | 1.20B | 1.23B | 684.68M |
| Cash Flow | Free Cash Flow | |||
| -74.96M | -75.88M | 28.10M | 21.73M | -69.15M | Operating Cash Flow |
| 45.83M | 45.54M | 139.82M | 141.22M | 28.68M | Investing Cash Flow |
| 19.28M | -112.59M | -121.47M | -153.41M | -168.13M | Financing Cash Flow |
| -73.95M | 71.86M | -16.84M | 16.10M | 139.44M |
Krispy Kreme Technical Analysis
Negative
2.86
Price Trends
4.00
Negative
5.88
Negative
8.34
Negative
Market Momentum
-0.36
Negative
31.36
Neutral
12.22
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DNUT, the sentiment is Negative. The current price of 2.86 is below the 20-day moving average (MA) of 3.22, below the 50-day MA of 4.00, and below the 200-day MA of 8.34, indicating a bearish trend. The MACD of -0.36 indicates Negative momentum. The RSI at 31.36 is Neutral, neither overbought nor oversold. The STOCH value of 12.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DNUT.
Krispy Kreme Risk Analysis
Krispy Kreme disclosed 37 risk factors in its most recent earnings report. Krispy Kreme reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
We have identified a material weakness in our internal control over financial reporting. If our remediation of the material weakness is not effective, or if we fail to develop and maintain an effective system of internal controls, our ability to produce timely and accurate financial statements may be impaired, investors may lose confidence in our financial reporting, and the price of our common stock may decline. Q4, 2024
2.
If we cannot keep pace with technological changes impacting our industry, we may be unable to compete effectively, and our results of operations could be negatively affected. Q4, 2024
3.
Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could have an adverse effect on our business. Q4, 2024
Krispy Kreme Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $1.11B | 27.08 | 23.38% | 0.95% | 9.36% | 43.17% | |
74 Outperform | $513.92M | 9.97 | 11.59% | 2.59% | 3.96% | 3.39% | |
67 Neutral | $2.02B | 18.86 | 7.54% | 1.81% | 1.76% | 6.01% | |
65 Neutral | $1.15B | 18.90 | 4.00% | 1.06% | -7.79% | -64.85% | |
62 Neutral | $6.90B | 11.12 | 2.92% | 3.89% | 2.68% | -25.06% | |
60 Neutral | $1.34B | 80.88 | 1.43% | ― | 10.37% | -73.84% | |
54 Neutral | $488.49M | 238.55 | -1.92% | 4.89% | -6.55% | 53.81% |
* Consumer Cyclical Sector Average
Performance Comparison
DNUT
Krispy Kreme
2.96
-7.10
-70.58%
IMKTA
Ingles Markets
60.94
-9.61
-13.62%
VLGEA
Village Super Market
38.64
11.77
43.80%
WMK
Weis Markets
74.71
11.55
18.29%
NGVC
Natural Grocers
46.28
24.94
116.87%
GO
Grocery Outlet Holding
14.03
-7.05
-33.44%
Krispy Kreme Corporate Events
Private Placements and FinancingBusiness Operations and StrategyFinancial Disclosures
Krispy Kreme Secures $125M Loan Amid Revenue Decline
Negative
May 8, 2025
On May 2 and May 7, 2025, Krispy Kreme, Inc. executed amendments to its existing credit agreement, securing $125 million in incremental term loan commitments to support general corporate purposes, including working capital and capital expenditures. The company reported a net revenue of $375.2 million for the first quarter of 2025, a decline of 15.3% compared to the previous year, primarily due to the divestiture of a majority stake in Insomnia Cookies. Despite the challenging macroeconomic environment, Krispy Kreme aims to focus on profitable U.S. expansion and international franchise growth, while addressing debt reduction and improving cash flow.
Executive/Board ChangesBusiness Operations and Strategy
Krispy Kreme Appoints Nicola J. Steele as COO
Positive
Mar 3, 2025
On March 3, 2025, Krispy Kreme appointed Nicola J. Steele as the Chief Operating Officer. Ms. Steele has been with the company since 2006, holding various leadership roles in Australia and New Zealand. Her new compensation package includes a $400,000 annual salary, participation in the company’s bonus and long-term incentive programs, and a one-time award of restricted stock units. This appointment is part of Krispy Kreme’s strategic leadership development, potentially strengthening its operational capabilities and market positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.