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Krispy Kreme Doughnuts, Inc. Message Board

  • gore_is_dillusional gore_is_dillusional Apr 22, 2000 12:11 AM Flag

    stockgate

    I tried to begin shorting this stock on Thursday,
    but my order was rejected because IPO's are not
    marginable until 30 days. I don't know why they caught this
    one, because I have been short on HOMG since the day
    after it IPO'd. That order got through, so I don't know
    what the deal is. Is there anyone out there whose
    online broker let them short this stock, or any other
    IPO's?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Was that the Excalibur?

    • how about being more realistic and compare old
      economy like KREM to old economy like Pfizer?

      I
      would much rather pay 43 1/2ps for PFE with a P/E of 53
      (which is still a little high but PFE has the pipeline
      to cover) than pay 43 1/2 for a franchise business
      no matter what it is.

      KREM is way overvalued.
      Future growth is great if you disregard fundementals and
      base your opinion on speculation which is why techs
      were at the levels they were but valuation is the name
      of the game at this point in time. The market, until
      recently hasnt played by the rules. You either move with
      the herd or get trampled by it. There will be a time
      to buy KREM but the time isnt now.

      I want my
      WGAT,
      kylyr

    • It's not tech, maybe that's why the price is so
      high. It seems that people have two sets of
      fundamentals that they want to apply, one for techs and for
      regular companies. But the fundamentals that determine
      price are universal. Regardless of what formulations
      you use, you are still plugging in revenue #'s and
      sales growth percentages etc.. But a month ago people
      paid $333 for a company like Microstrategy and are
      desperate to unload it at $24 today, with some still
      convinced it is overpriced. Again, its not a tech stock,
      maybe that's why it looks good. The $333 paid for
      Microstrategy was based on was what people thought was some
      future value based on current #'s and future projections
      its the same with KK, the difference is earnings,
      though small are real. A bird in the hand beats two in
      the bush.

      No, they do not install doghnuts in
      Dell computers, but they will install doughnuts in
      Dell Computer makers.

    • Even if KK has a retail presence in addition to
      the restaurant side, food manufacturers also are not
      afforded high multiples. Now if Dell was installing donuts
      in PC's as memory boards or something, I suppose you
      could say it should be afforded a higher multiple, but
      neither industry you claim to compare this to is remotely
      valued this way.

      Perhaps a better comparison
      would be Starbucks. Very dedicated clientle, retail
      presence in both dry and frozen categories, with
      instituional presence, KREM-like multiple, etc. Of course,
      SBUX is growing like a weed compared to KREM, and also
      has better margins. I'd rather own SBUX than KREM
      given the same multiple, and even SBUX is a little
      lower now.

      But I keep going back to KREM's
      relatively low operating margins. With so many synergistic
      things supposedly going on, why can't they make money
      like the poor slobs I mentioned earlier? And if they
      can't, who cares what venues they are selling products?

    • making machine and the urge to get back to the casino.

    • I don't disagree with any of your points, they
      are all well made, except for the fact you keep
      refering to KK as restaurant. I do not see MacDonald's
      fries in the frozen section at my grocery store. When I
      was at Parris Island SC, we were not served Egg
      McMuffins at breakfast. But KK was there. A franchise
      offers so much more than just seling to
      walk-ins/drive-ins. You make it so your product sits on local grocery
      stores for no less than a day, you ship to cafes,
      businesses, military installations. It give you so much more
      territory to expand your product. You don't need a KK every
      3 miles like you do a Mickey D's. I drive 8 miles
      from home to work and I pass 4. I'm not an enthusiast,
      its close and convienent. But I will go well out of
      my way for a KK

    • I know people who won't go to anything other than
      a Darden restaurant, a Mickey D's, etc. Everyone
      has their enthusiasts.

      What I do not
      understand is that for all their popularity, this company is
      still not very profitable. I work for a privately held
      restaurant chain with slightly higher revenues and triple
      the net income. Also, we are growing faster. Our
      investment bankers tell us that if we were to go public now
      we'd get a P/E of maybe 20. When I bring up KREM, they
      just smile and say "wait a few months".

      As for
      having a long term horizon, thats all well and good, but
      why pay 2005 prices in 2000 when you can wait until
      the lockup expires and the hype is over and buy it at
      $15-$20? If you look at their projected growth, its no
      higher than the "restaurant" companies you claim its not
      related to. Regardless of how you care to classify it, if
      two companies are growing at the same rate, shouldn't
      they be valued the same? Compare KREM to WEN, JBX,
      DRI, etc., and you'll see that KREM has more downside
      potential than upside in the short term. To say that you're
      a long term investor is the same as putting money
      under your mattress with the idea that even though over
      the next five years it will go nowhere in the long
      run you'll get it back.

    • I remember KK sponsering the Ol' Rebel show with
      the ad "King of American Doughnuts". They
      are
      that. When a store opened in NY city the
      line was
      around the block for days. A man in
      northern Ca.
      opend a store, had such a response
      he applied for 5
      more franchizes. They are @
      the White House on
      Easter along with their
      special blend coffee. They
      are not your regular
      doughnuts, they've been here
      and grown for years without the fadish southern Ca.
      people.
      The IPO was not to bail them out but help them

      grow faster. As Congovman said, they are not

      really a restaurant but they had to be
      grouped
      somwhere, there's not a group for "got-to-have-some"

    • As a long time customer of Krispy Kreme I would
      not exactly call it a restaurant. Besides, most of
      the store also have a factory attached. So is it a
      manufacturing plant? Whatever KK is, it is a unique place and
      it provideds a unique experiance for many
      people.

      As we drive up to KK on Sundays my 6 year old often
      sings:

      O Krispy Kreme O Krispy Kreme
      You are so good
      and sticky
      (Sing it to O Christmas Tree it is
      quite catchy)

      So what do you think the
      probability of my grandkids being KK customers is? I'd bet a
      good one.

      What's the difference in Benegins,
      Ruby Tuesday, Outback to Lone Star? If one is crowded
      I'll drive 5 minutes to the other, but I would not go
      to another Doughnut shop. My wife worked at Dunkin
      Dognuts as a teen. She prefers KK. She like the freshness
      of the cream filling as well as the hot fresh
      glazed. So you see it is not like other restaurants, it
      has a niche.

      As for my other point. Sure the
      money from the IPO is being used to pay down debt and
      refurbish older stores, but those stores have stayed in
      business for 30+ years. What type of equipment life does
      this company have? If expansion is controlled ( no
      Boston Market ) I believe the company will hit a place
      where they will be able to sit back and watch the $$$
      roll in without the cash going towards expansion,
      limited R&D, and the occassional new store or
      refurbishing of an older store. Then where will all the excess
      cash go? Retained earnings or dividends.

      Again,
      I have no arguement that the stock is over-valued,
      but what is it over-valued compared to? Sure,
      everything in the financials and in their market suggests a
      lower price, but a higher price could be reflective
      what people believe the company will do. That is what
      stock price is based on, expected returns. I'm looking
      long term like 3 years to 5 years.

    • ...that other restaurant stocks would also be
      richly valued. After all, if this business is such a
      cash generating business, you would expect to see high
      multiples for its peer group.

      Unfortunately,
      companies with similar sales, profits and growth
      projections sell at a quarter the P/E of this company.
      Companies that have proven their concept nationally, unlike
      KK.

      I agree with you that earnings and
      dividends do matter, although since KK has little of the
      first and none of the second I am not quite sure what
      your point is.

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