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Krispy Kreme Soars to Multiyear High on Sweetened Outlook

The Exchange

Krispy Kreme Doughnuts (KKD) was hitting the best level it's seen in nine years after it easily topped earnings estimates and boosted its profit forecast for the fiscal year.

Krispy Kreme doughnuts: Credit Discovery Channel

Shares of the Winston-Salem, N.C., doughnut shop hit a high of $16.92 after trading got under way, and recently they were at $16.60, up $2.34, or 16.4%. The last time the stock was at a higher point intraday was in July 2004. Less than an hour into the session, volume was nearly three times what it is for a normal full day.

The move also represented the 10th-best percentage gain in its public history that goes back to 2000, according to FactSet data.

Krispy Kreme's surge followed its announcement that revenue for the fiscal first quarter rose 11.2% from a year earlier to $120.6 million, while same-store sales climbed 11.4%. Adjusted earnings were 20 cents a share, 4 cents ahead of estimates. Revenue was around $4 million more than had been expected by analysts.

"While our same-store sales numbers over the next three quarters are likely to be less dramatic as we come up against our outstanding comp performance last year, we are confident in our belief that we can deliver strong and sustainable financial returns for our shareholders," the company said in a press release issued Thursday afternoon.

The same-store sales commentary was a minor sidebar that did nothing to deter investors, who were focused on the earnings projection. Looking ahead, Krispy Kreme took its fiscal 2014 earnings forecast up by 6 cents, from a range of 53 cents to 57 cents, to between 59 cents and 63 cents, excluding items. Wall Street had been planning for 55 cents.

At the moment, Krispy Kreme is quite a way from the accounting scandal of the mid-2000s that made the once-beloved stock toxic, but it has been a slow climb out of that mire. It's also still only trading at about one-third of the price it was during its cult days of the previous decade, when it stormed into new markets like New York with its hot, glazed doughnuts.

Krispy Kreme Doughnuts Chart

Starting in the summer of 2007 and going for the next three years, it was typically in the $5 and under club, sinking as low as $1.08 a share in February 2009 (just a month before the all-time market lows hit in March). This past January, on the second trading day of 2013, it crossed above $10 for the first time in a year and a half. The last time it was past the double-digit mark occurred when it reached $10.08 intraday in June 2011.

Coming into the current session, the stock was already up 127% in the past year and 46% for the year to date. Competitor Dunkin' Brands (DNKN), whose $4.3 billion market cap makes it about four times the size of Krispy Kreme, has gained 23% since May 2012 and 19% from the beginning of this year.