Krispy Kreme, Inc. (NASDAQ: DNUT)

Sector: Consumer Defensive Industry: Grocery Stores CIK: 0001857154
Market Cap 498.48 Mn
P/B 0.74
P/E -0.98
P/S 0.32
ROIC (Qtr) -19.07
Div Yield % 2.74
Rev 1y % (Qtr) -1.20
Total Debt (Qtr) 1.55 Bn
Debt/Equity (Qtr) 2.31
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About

Krispy Kreme, Inc., or DNUT, is a renowned company in the food industry, specializing in the creation and sale of fresh, hot-off-the-line doughnuts and other sweet treats. With a presence in 39 countries, Krispy Kreme has established itself as a global brand, operating through a network of fresh doughnut shops, partnerships with leading retailers, and an e-commerce platform. The company's main business activities revolve around providing fresh, high-quality doughnuts and sweet treats to customers worldwide. Krispy Kreme's product offerings are...

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Investment thesis

Bull case

  • Free cash flow of (98.81M) provides excellent 5.53x coverage of dividends (17.88M), indicating sustainable shareholder returns.
  • Tangible assets of 1.09B provide robust 10.49x coverage of other current liabilities 103.67M, indicating strong asset backing.
  • Cash reserves of 31.15M exceed inventory value of 28.08M by 1.11x, indicating strong liquidity and inventory management.
  • Strong tangible asset base of 1.09B provides 13.89x coverage of acquisition spending 78.34M, enabling strategic growth.
  • Tangible assets of 1.09B provide robust 2.42x coverage of current liabilities 448.93M, showing strong asset backing.

Bear case

  • Operating cash flow of 15.95M barely covers its investment activities of (22.05M), with a coverage ratio of -0.72, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 15.95M provides thin coverage of dividend payments of (17.88M) with a -0.89 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 31.15M provide limited coverage of acquisition spending of 78.34M, which is 0.40x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 15.95M shows concerning coverage of stock compensation expenses of 18.56M, with a 0.86 ratio indicating potential earnings quality issues.
  • Free cash flow of (98.81M) provides weak coverage of capital expenditures of 114.76M, with a -0.86 ratio suggesting additional external financing needs for growth initiatives.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Grocery Stores
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KR Kroger Co 50.34 Bn 26.79 0.34 25.20 Bn
2 ACI Albertsons Companies, Inc. 10.14 Bn 14.10 0.15 15.43 Bn
3 SFM Sprouts Farmers Market, Inc. 6.63 Bn 12.92 0.77 1.86 Bn
4 WMK Weis Markets Inc 1.95 Bn 30.13 0.67 0.18 Bn
5 IMKTA Ingles Markets Inc 1.60 Bn 9.10 0.27 0.54 Bn
6 GO Grocery Outlet Holding Corp. 1.11 Bn -251.00 0.24 1.81 Bn
7 DDL Dingdong (Cayman) Ltd 0.61 Bn 15.44 0.18 0.35 Bn
8 NGVC Natural Grocers by Vitamin Cottage, Inc. 0.61 Bn 12.68 0.45 0.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.78 0.85
EV to Cash from Ops. EV/CFO 127.57 10.95
EV to Debt EV to Debt 1.32 2.65
EV to EBIT EV/EBIT -4.29 17.17
EV to EBITDA EV/EBITDA -5.80 4.97
EV to Free Cash Flow [EV/FCF] EV/FCF -20.59 -2.66
EV to Market Cap EV to Market Cap 4.08 2.07
EV to Revenue EV/Rev 1.33 0.52
Price to Book Value [P/B] P/B 0.74 1.46
Price to Earnings [P/E] P/E -0.98 -10.31
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -28.54 -0.52
Dividend Payout Ratio % Div Payout % (Qtr) -3.80 20.93
Dividend per Basic Share Div per Share (Qtr) 0.08 0.46
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -13.00 130.08
Interest Coverage Int. cover (Qtr) -7.31 -12.18
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 4.13 0.38
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 20.35 36.75
Dividend Growth (1y) % Div 1y % (Qtr) -53.12 3.04
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -580.87 -54.96
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -344.23 -64.08
EBIT Growth (1y) % EBIT 1y % (Qtr) -671.23 -86.63
EBT Growth (1y) % EBT 1y % (Qtr) -2,254.11 -219.58
EPS Growth (1y) % EPS 1y % (Qtr) -1,968.75 -171.99
FCF Growth (1y) % FCF 1y % (Qtr) 0.59 3.92
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -26.71 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.59 1.74
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.05
Cash Ratio Cash Ratio (Qtr) 0.07 0.30
Current Ratio Curr Ratio (Qtr) 0.36 1.21
Debt to Equity Ratio Debt/Equity (Qtr) 2.31 1.90
Interest Cover Ratio Int Coverage (Qtr) -7.31 -12.18
Times Interest Earned Times Interest Earned (Qtr) -7.31 -12.18
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -21.90 1.72
EBIT Margin % EBIT Margin % (Qtr) -30.89 -0.05
EBT Margin % EBT Margin % (Qtr) -35.11 -1.40
Gross Margin % Gross Margin % (Qtr) 22.80 24.88
Net Profit Margin % Net Margin % (Qtr) -33.30 -1.65