Doughnut chain Krispy Kreme (NASDAQ:DNUT) beat analysts' expectations in Q2 CY2024, with revenue up 7.3% year on year to $438.8 million. The company's full-year revenue guidance of $1.67 billion at the midpoint. It made a non-GAAP profit of $0.05 per share, down from its profit of $0.07 per share in the same quarter last year.
Is now the time to buy Krispy Kreme? Find out by accessing our full research report, it's free.
Krispy Kreme (DNUT) Q2 CY2024 Highlights:
- Revenue: $438.8 million vs analyst estimates of $434 million (1.1% beat)
- Adjusted Operating Income: $27.52 million vs analyst estimates of $11.19 million (146% beat)
- EPS (non-GAAP): $0.05 vs analyst expectations of $0.05 (in line)
- EPS (non-GAAP) guidance for the full year is $0.26 at the midpoint, missing analyst estimates by 2.7%
- EBITDA guidance for the full year is $217.5 million at the midpoint, below analyst estimates of $230.8 million
- Gross Margin (GAAP): 27%, up from 26.6% in the same quarter last year
- Adjusted EBITDA Margin: 12.5%, in line with the same quarter last year
- Free Cash Flow of $1.56 million is up from -$46.77 million in the previous quarter
- Locations: 15,853 at quarter end, up from 12,872 in the same quarter last year
- Market Capitalization: $1.76 billion
“Krispy Kreme had another strong quarter as our fresh doughnuts are becoming even easier to purchase and more available globally,” said Josh Charlesworth, CEO.
Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ:DNUT) is one of the most beloved and well-known fast-food chains in the world.
Traditional Fast Food
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales Growth
Krispy Kreme is larger than most restaurant chains and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 13.9% over the last five years was impressive as it added more dining locations and expanded its reach.
This quarter, Krispy Kreme reported solid year-on-year revenue growth of 7.3%, and its $438.8 million in revenue outperformed Wall Street's estimates by 1.1%. Looking ahead, Wall Street expects sales to grow 6.1% over the next 12 months, a deceleration from this quarter.
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Number of Stores
A restaurant chain's total number of dining locations is a crucial factor influencing how much it can sell and how quickly company-level sales can grow.
When a chain like Krispy Kreme is opening new restaurants, it usually means it's investing for growth because there's healthy demand for its meals and there are markets where the concept has few or no locations. Since last year, Krispy Kreme's restaurant count increased by 2,981, or 23.2%, to 15,853 locations in the most recently reported quarter.
Taking a step back, Krispy Kreme has rapidly opened new restaurants over the last eight quarters, averaging 16.5% annual increases in new locations. This growth is much higher than other restaurant businesses. Analyzing a restaurant's location growth is important because expansion means Krispy Kreme has more opportunities to feed customers and generate sales.
Key Takeaways from Krispy Kreme's Q2 Results
It was good to see Krispy Kreme beat analysts' revenue expectations this quarter. We were also happy its EPS narrowly outperformed Wall Street's estimates. On the other hand, its gross margin missed Wall Street's estimates. Overall, this quarter could have been better. The stock remained flat at $10.49 immediately after reporting.
So should you invest in Krispy Kreme right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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