It appears that management's "adjusted" EPS includes the benefits of the net operating losses KKD accumulated over the years. The full year EPS estimates, and I believe many of the analyst estimates are inflated. Once the NOLs are exhausted, the earnings power of this company will drop accordingly. I pay attention to the diluted EPS number, even though the cash earnings will be closer to the adjusted number in the next few years. Investors are buying all the future earnings of this company, not just the next few. Further, most of the net present value of a company is in the out years (not the next few).
Looks like a nice turnaround story, but whenever I see analyst upgrades at multi-year highs I have to ask myself, "where were you when the stock was left for dead?" You literally had years to find out about this... so tell your clients to buy when the stock has more than tripled in the last year??? Investors were paying $12 before the last earnings release. Why can't these analysts go out on a limb and uncover a hidden gem? The stock has nearly doubled after 1 earnings report. If it took one quarter for Krispy Kreme investors to realize this company is twice as valuable, then people must be really lazy. Looks a bit overbought here. If everyone is so bullish, tell me what fantasy isn't priced in at these levels.
Going to $70 based on what? You haven't provided any analysis to back up such a bold claim. Until this year, international franchise fees were the most important revenue stream. If you didn't notice, the international franchise sales were down terribly last quarter, if not in free fall. Most of their stores are overseas. I see that KKD has achieved some operating leverage with the increase in U.S. sales. I don't see the company opening up a material number of stores fast enough to move the needle. I see longer term health trends affecting any player that serves up unhealthy garbage.