Krispy Kreme Doughnuts (KKD) of the Krop – The Doughnut Stock You Should Own

Another breakfast competitor is Einstein Noah Restaurant Group, Inc. (NASDAQ:BAGL), which owns, operates, and franchises bagel restaurants across the United States. Bagels are a little like doughnuts, but with some major differences in cost and quality. Bagels have more nutritional value and can be made into breakfast sandwiches, but doughnuts are cheaper and can act as a breakfast, desert, or late night snacks. Like Dunkin Brands’, the bagel company has had a recent dip in growth. Its most recent earnings report missed Wall Street expectations when earnings per share decreased 33.33% to $0.14 last quarter. In hopes of recovering, Einstein Noah Restaurant Group, Inc. (NASDAQ:BAGL) is introducing a new garden-fresh themes menu that will include a Tuscan Bagel, a Tasty Turkey Sandwich, and a Denver Omelet Sandwich.

Of these two competitors, I think the most threatening for Krispy Kreme is Dunkin Brands Group Inc (NASDAQ:DNKN)’. If Krispy Kreme’s increased focus on coffee and other beverage sales is a success then it could take customers from Dunkin Brands’.

Conclusion

Krispy Kreme has had rapid growth over the past few years and with its international and domestic expansion plans, I think the doughnut maker still has a lot of growing to do. With a forward P/E of 24.58 and a PEG of 1.15 I think Krispy Kreme would be a good buy as it continues its well-calculated expansion in the future.

The article Kreme of the Krop: The Doughnut Stock You Should Own originally appeared on Fool.com and is written by Ben Popkin.

Ben Popkin has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Ben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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