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Executive Summary
We have undertaken the task of determining whether Krispy Kreme Doughnuts, Inc. is worthwhile as an investment. For a healthy analysis of Krispy Kreme, it is appropriate to analyze (1) the health of the specialty foods industry in which the company competes and derives its revenues and (2) how well the company is competing and deriving revenues. To perform this analysis, we present a business analysis, with a focus on the industry and the Krispy Kreme approach to competition. We present an accounting analysis to assess whether the company's accounting procedures and disclosure policy are beneficial to stakeholders. Finally, we offer a financial analysis of Krispy Kreme, using relevant ratios to assess the position of the company.
We have determined through our research that Krispy Kreme Doughnuts, Inc. is not sound for new investment. Hopes of potential acquisition by McDonalds remain unrewarded. Investing in Krispy Kreme is highly risky because of volatile stock performance, poor financial results, and an indeterminate future. Krispy Kreme's high-growth strategy has reached a (perhaps temporary) limit, making the company seem out-of-favor relative to its once-lauded IPO. The company must rearrange its priorities to avoid losing what it has so diligently worked for in the past. Our recommendation to prospective investors is to look elsewhere for stellar performance, or hold out until Krispy Kreme starts producing more valuable figures.
Business Analysis
Competitive Landscape
The specialty and fast-food restaurants industry is popular among middle-class America. Many companies in the industry have existed for decades; ...