What Happened:
Shares of doughnut chain Krispy Kreme (NASDAQ:DNUT) jumped 14.8% in the morning session after the company reported second quarter earnings results. Krispy Kreme provided optimistic full-year revenue guidance, which blew past analysts' expectations. Its revenue also outperformed Wall Street's estimates. Given the strong topline performance indicating healthy near-term demand, the company announced plans to launch in Germany and Brazil. Management also noted that expansion in the U.S. market is accelerating in light of the recent partnership with McDonald's. On the other hand, its EPS missed, and its full-year earnings guidance fell short. Overall, this was a mixed but decent quarter for Krispy Kreme.
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What is the market telling us:
Krispy Kreme's shares are not very volatile than the market average and over the last year have had only 14 moves greater than 5%. Moves this big are very rare for Krispy Kreme and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock gained 36.5% after company announced in a press release that it would provide fresh doughnuts daily at McDonald's restaurants nationwide (in the United States). According to the report, the Phased rollout will begin in the second half of 2024, with nationwide availability expected by the end of 2026. This is positive news for Krispy Kreme as the move should accelerate its sales velocity and eventually be accretive to revenue growth given the power of the McDonald's brand.
Krispy Kreme is down 29.6% since the beginning of the year, and at $10.37 per share it is trading 40.2% below its 52-week high of $17.35 from March 2024. Investors who bought $1,000 worth of Krispy Kreme's shares at the IPO in June 2021 would now be looking at an investment worth $493.81.
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