Krispy Kreme Doughnuts Has A Long Runway Of Rapid Sales And Earnings Growth, Says Roth Capital

In a research report released this morning, Roth Capital analyst Anton Brenner reiterated coverage with a “Buy” rating on Krispy Kreme Doughnuts (KKD), and a price target of $27.00 following an investor meeting with KKD’s new President and CEO, and Doug Muir, CFO. Discussions focused on what Tony Thompson’s priorities are, the new format factory stores, store expansion, beverage sales and additional sales drivers, among other topics.

The following bullets contain some thoughts from that meeting:

  • We anticipate that new CEO Tony Thompson’s focus initially will be on establishing a more comprehensive digital and social media data collection and information base and upgrading the consumer loyalty program, and prioritizing new geographic expansion opportunities.
  • Domestically, supply lines are well established, and the primary objective is to choose the best available franchisees as it expands. Internationally, the company will attempt to leverage its existing supply infrastructure, which probably means that expansion priorities will be Asia and Central America.
  • Likely sales drivers going forward include an upgraded loyalty program, continuation of store remodeling, which has another three years to go on the current program, continued use of LTOs, increased fundraising sales and increasing the sales mix of coffee.

“We continue to believe that Krispy Kreme has a long runway of rapid sales and earnings growth”, Brenner noted.

According to TipRanks, which measures analysts and bloggers success rate based on how their calls perform, analyst Anton Brenner currently has a one-year average return of 25.5% and a 63% success rate. Brenner has an 31.2% average profit recommending KKD, and he is ranked #781 out of 3141 analysts.

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