Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?Now, why on earth would anyone invest in Krispy Kreme Doughnuts (NYSE: KKD)? Sure, if you were bored one day and wanted to do some gambling because you couldn't make it to a casino, then you maybe could use a little bit of your risk capital to fool around with the everyday gyrations of the shares. Other than that, there's no reason to consider this once-hot stock of yesteryear.
As one might expect, Krispy Kreme reported a GAAP loss for the third quarter. The red ink was worth $0.09 per share, which was eight pennies worse than the previous year's quarter. The press release talks about a few factors that affected the dismal showing. Let's see, increased commodity costs led to higher doughnut-mix prices. Shortening was also more expensive. Then there was the increase in gasoline prices. Of course, the release was quick to point out that fuel prices did retreat recently, so I don't think the company will be able to use that excuse next time around. Krispy Kreme has a load of problems that go beyond the macro environment. Simply put, it's a mess of a company that needs to get its turnaround act in order.
Stepping away from the bleak GAAP picture for a moment, I will say that Krispy Kreme did improve its free-cash-flow prospects. Net cash from operations saw an increase, and capital expenditures saw a decrease. That may be a welcome improvement, but in no way does that mean I suddenly see value in this business. Krispy Kreme's brand equity needs a radical jumpstart, and I'm simply inclined to pass on the stock.
Disclosure: I don't own any company mentioned; positions can change at any time.
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Reader Comments (Page 1 of 1)
12-12-2008 @ 10:30PM
shelly said...
Steven,
Krispy Kreme Stocks down?
Do you know why?
Have you ever seen the size of the people who eat at Krispy Kreme Doughnuts. OMG their HUGE. They scarf down a dozen of these doughnuts. Then wash it down with the place settings.
Krispy Kreme is losing money on the place settings.
12-12-2008 @ 11:51PM
Hugh said...
OK Folks! Krispy Kreeme make donuts, as does Duncan Donuts, and other donut companies in the USA. All for many years. Your criticisms are unfounded and un-justified. MacDonalds, Burger King, Wendy's,Taco bell, Golden Corral, ect. all feed the same fat, skinny, ugly, --- ect. Its their business.
Can you imagine for once how the people lived after WW-2 and in Eastern Europe. No Food Today ! No food for weeks. Eat what you can find and get all you can carry ! It can easily happan here in the USA as it has in China, Europe, Asia ect.
12-13-2008 @ 6:06AM
Lorenah said...
krispyKreme is the best doughnuts any where and have been from day one I know the world says dunkin but they dont cut it I hope Krispy Kreme never closes
12-13-2008 @ 9:54AM
Angiebaby said...
This surprises me. Krispy Kreme is not my favorite donut by any stretch. But anytime you ask someone (except me) about either the best donuts, or their favorite donuts, Krispy Kreme ALWAYS makes the list, usually topping it! But it's losing money?
My favorites are/were The Donut Hole in Destin, and The Donut Man in Frazier (eons ago!). Dunkin' Donuts used to be a favorite, but that's when they were popular way back when in Memphis, but then they started to close down, so I haven't had a DD treat in forever, even though it seems they have made a big comeback. There is also a good donut place here in town, but I don't know its name or its location. Which is good for me....