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Krispy Kreme Doughnuts, Inc. Message Board

  • roger7485 roger7485 Jun 23, 2011 10:33 AM Flag

    Its funny...

    Shorts could pick almost any stock in this market and make money, except KKD. And any short who has been lucky enough to a time a dip of KKD right certainly could have made much more shorting something else.

    I'm gonna let everyone in on a little secret. I knew KKD was going to beat estimates last quarter because the analysts hadn't figured in the savings from the refinancing they did early this year. Guess what, analysts still haven't raised their EPS estimates for the 2nd quarter, meaning it would be amazing if they didn't beat again. Now consider that the headline number is going to be absolutely huge because of the sale of equity in the Brazilian stores. Yes, they will report an ex-items number too, but does anyone remember what happened when they missed by alot on the headline number in Q4? The stock dropped 2 bucks and everyone panicked.

    Current estimate is .06, add .02 from the interest savings and add .06 from the Brazilian sale and you have a .14 EPS headline and .08 ex-items minimum. A beat like this, or possibly even more from positive business momentum, will set off a positive news cycle that will have people scrambling to buy in.

    These estimates don't even factor in things like a buyout offer or their coffee initiative, which to be honest could be their biggest growth driver in 2012.

    As someone who has owned this stock for a good while now, I'm doing my best to stay level headed and remain calm about the potential here. I think a pullback is possible, but I don't see it going below 8 with the strength it has shown in the face of the recent market swoon. My year end target is 14 based on the direction the company is headed, and higher than that isn't out of the question.

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