Krispy Kreme Doughnuts (NYSE: KKD) and GNC (NYSE:GNC) are both small-cap non-cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Dividends

GNC pays an annual dividend of $0.20 per share and has a dividend yield of 4.2%. Krispy Kreme Doughnuts does not pay a dividend. GNC pays out -3.7% of its earnings in the form of a dividend. Krispy Kreme Doughnuts has increased its dividend for 4 consecutive years.

Profitability

This table compares Krispy Kreme Doughnuts and GNC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Krispy Kreme Doughnuts 6.90% 15.58% 11.41%
GNC -15.11% -133.37% 3.95%

Valuation and Earnings

This table compares Krispy Kreme Doughnuts and GNC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Krispy Kreme Doughnuts N/A N/A N/A $0.47 44.68
GNC $2.54 billion 0.13 -$286.25 million ($5.46) -0.86

Krispy Kreme Doughnuts has higher earnings, but lower revenue than GNC. GNC is trading at a lower price-to-earnings ratio than Krispy Kreme Doughnuts, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Krispy Kreme Doughnuts has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500. Comparatively, GNC has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Krispy Kreme Doughnuts and GNC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Krispy Kreme Doughnuts 0 0 0 0 N/A
GNC 5 2 0 0 1.29

GNC has a consensus target price of $7.58, suggesting a potential upside of 61.00%. Given GNC’s higher possible upside, analysts clearly believe GNC is more favorable than Krispy Kreme Doughnuts.

Insider & Institutional Ownership

61.9% of GNC shares are owned by institutional investors. 1.9% of GNC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Krispy Kreme Doughnuts Company Profile

Krispy Kreme Doughnuts, Inc. is a retailer and wholesaler of doughnuts, complementary beverages, and treats and packaged sweets. The Company’s principal business includes owning and franchising Krispy Kreme stores, at which a range of doughnuts, including the Company’s Original Glazed doughnut, together with complementary products, including an array of coffees and other beverages. The Company operates through four business segments: Company Stores, Domestic Franchise, International Franchise and KK Supply Chain. The Company Stores segment includes the doughnut shops operated by the Company. The Domestic Franchise segment consists of the Company’s domestic store franchise operations and the licensing of Krispy Kreme products domestically. The International Franchise segment consists of the Company’s international store franchise operations. The KK Supply Chain segment produces doughnut mixes and manufactures doughnut-making equipment.

GNC Company Profile

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company’s operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.

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