Shares of doughnut chain Krispy Kreme (NASDAQ:DNUT) fell 8.5% in the morning session after the company reported third quarter results with revenue, gross margin, adjusted EBITDA, and EPS all falling below analysts' expectations. These misses were driven by underperformance in its U.S. division, which accounted for 63.9% of sales this quarter. A number of restaurant and other discretionary companies have highlighted an uncertain consumer spending environment in the US as of late. On top of that, its revenue guidance for the full year was underwhelming. On the bright side, it opened more stores than projected, giving it more opportunities to grow its top line in the future. Overall, this was a bad quarter for Krispy Kreme.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Krispy Kreme? Access our full analysis report here, it's free.
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 8 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Krispy Kreme is up 17.9% since the beginning of the year, but at $12.31 per share it is still trading 23% below its 52-week high of $15.98 from November 2022. 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 $586.67.
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