Winston-Salem, North Carolina-based
Krispy Kreme Doughnuts Inc
) is set to boost investors' wealth by initiating a share buyback
The board of directors of Krispy Kreme, an international
chain of doughnut stores, has approved a new share repurchase
program worth approximately $20 million. The company seeks to
exercise the program in the open market or in negotiated
transactions, depending on share price and other macro factors.
As of March 28, 2012, the company had shares outstanding of
about 68 million. At the end of fourth quarter 2012, the company
had cash and cash equivalents of $44.3 million and long-term debt
less current maturities of $25.4 million.
We appreciate Krispy Kreme's effort to enhance shareholders'
value. We believe that the new share repurchase authorization
affirms the company's positive outlook and reflects solid growth
potential going forward.
Following the company's announcement, significant movement in
the company's share price was witnessed. The new authorization has
increased investor confidence in the company. The share price of
Krispy Kreme climbed 2.1% from the previous day price, to close at
$7.46 on Wednesday.
Over the last 7 days, there has been no movement in the
analysts' estimate. However, we believe that the news of the
share buyback program might encourage the analysts to pull their
estimates upward. The current Zacks Consensus Estimate for
first-quarter 2012 is 10 cents per share. For full year 2012 and
2013, the Zacks Consensus Estimates are 27 cents and 34 cents,
In the recently concluded fourth quarter of 2011, Krispy Kreme
reported adjusted earnings of 6 cents per share, lagging the Zacks
Consensus Estimate by a penny. Quarterly earnings came in the
positive territory from the year-ago loss of 2 cents per share.
Total revenue climbed 11.2% year over year to $102.0 million in the
For 2013, operating income has been guided to a range of $29
million to $33 million, inclusive of impairment and lease
termination costs. Free cash flow is estimated in the range
of $71 million to $21 million.
Earnings are estimated to remain between 21 cents and 24 cents
per share. On an adjusted basis, management expects earnings
in the range of 35-41 cents per share, which includes only income
tax. The huge difference in both guidance resulted from an increase
in the estimated tax rate to 45% from management's earlier estimate
of 6-7%. The higher tax rate arises out of the reversal of
valuation allowances on deferred tax assets in the fourth quarter
of fiscal 2012.
Krispy Kreme remains focused on its expansion plan, menu
innovation and an enthusiasm to brew up its beverage line.
Additionally, the company also remains committed to expanding its
business in both international and domestic markets.
Krispy Kreme currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on the stock. One of its
Texas Roadhouse Inc
) currently retains a Zacks #1 Rank, which translates into a
short-term Strong Buy rating
KRISPY KREME (
): Free Stock Analysis Report
TEXAS ROADHOUSE (
): Free Stock Analysis Report
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