Krispy Kreme Doughnuts (KKD) Ups Full Year Estimates, Share Buybacks

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Krispy Kreme Doughnuts (NYSE:KKD) raised its full-year earnings per share estimates, and stated that it would repurchase $30 million more of its shares. The doughnut retailer also posted quarterly results that missed analysts’ estimates, but shares surged 11% in extended trading.

Kripsy Kreme a volatile stock

The company is expecting earnings of 73-79 cents per share for the year ending January 2015, an increase from the previous forecast of 71-76 cents per share. Analysts are expecting earnings of 75 cents per share for the Winston-Salem, North Carolina based company.

Krispy Kreme Doughnuts (NYSE:KKD), which is in the business of distributing doughnuts to grocers, mass merchants and convenience stores, said the increased forecast takes into account 2 million fewer shares outstanding owing to its buyback program. The company also stated that it would up its repurchase program to $80 million from $50 million.

Krispy Kreme Doughnuts (NYSE:KKD) is not a high value stock, but it has a forward price-to-earning ratio of 24.9, which is below its five-year average, not usual in its sector. It is better than Dunkin brands and the larger set of publicly related restaurants as far as next 12 months’ multiple is concerned. Krispy Kreme, which issued its IPO in 2000, has been a polarizing stock for years. In the year 2009, the stock fell as low as $1.08, but surged to $26 last November.

Impressive 4Q performance

For the fourth quarter of 2013, Krispy Kreme posted net income of $14.8 million, or 21 cents per share, which is almost four times the $4.0 million or 6 cents per share posted by the company in the corresponding quarter of the previous year. The company earned 12 cents after excluding certain items.

Revenue for Krispy Kreme Doughnuts (NYSE:KKD) surged 3.3% to $112.7 million, supported by a 1.6% rise in the company’s same-store sales. Analysts expected adjusted earnings of 13 cents per share on revenue of $119.6 million.

Same-store sales surged 6.2% at domestic franchise stores, but at international franchises same-store sales dropped 3.4%. At present, Krispy Kreme operates and franchises more than 800 locations all over the world, and it is expecting total system wide store count to increase more than 10%, in fiscal 2015. The new stores from Krispy Kreme Doughnuts (NYSE:KKD) will focus on small, freestanding factory that will not distribute to grocers, mass merchants, or convenience stores.

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