Financial Survey: Krispy Kreme Doughnuts (KKD) and Kroger (KR)

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

Valuation & Earnings

This table compares Krispy Kreme Doughnuts and Kroger’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
Kroger $115.34 billion 0.21 $1.98 billion $1.68 16.26

Kroger has higher revenue and earnings than Krispy Kreme Doughnuts. Kroger 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.

Analyst Ratings

This is a summary of recent ratings for Krispy Kreme Doughnuts and Kroger, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Krispy Kreme Doughnuts 0 0 0 0 N/A
Kroger 0 13 11 0 2.46

Kroger has a consensus price target of $30.17, suggesting a potential upside of 10.44%. Given Kroger’s higher possible upside, analysts clearly believe Kroger is more favorable than Krispy Kreme Doughnuts.

Dividends

Kroger pays an annual dividend of $0.50 per share and has a dividend yield of 1.8%. Krispy Kreme Doughnuts does not pay a dividend. Kroger pays out 29.8% of its earnings in the form of a dividend. Kroger has increased its dividend for 9 consecutive years.

Volatility and Risk

Krispy Kreme Doughnuts has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Kroger has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Krispy Kreme Doughnuts and Kroger’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%
Kroger 1.31% 28.60% 4.94%

Institutional and Insider Ownership

79.6% of Kroger shares are owned by institutional investors. 0.9% of Kroger shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Kroger beats Krispy Kreme Doughnuts on 9 of the 14 factors compared between the two stocks.

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.

Kroger Company Profile

The Kroger Co. (Kroger) manufactures and processes food for sale in its supermarkets. The Company operates supermarkets, multi-department stores, jewelry stores and convenience stores throughout the United States. As of January 28, 2017, it had operated approximately 4,000 owned or leased supermarkets, convenience stores, fine jewelry stores, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. As of January 28, 2017, Kroger operated, either directly or through its subsidiaries, 2,796 supermarkets under a range of local banner names, of which 2,255 had pharmacies and 1,445 had fuel centers. As of January 28, 2017, the Company offered ClickList and Harris Teeter ExpressLane, personalized, order online, pick up at the store services at 637 of its supermarkets. P$$T, Check This Out and Heritage Farm are the three brands. Its other brands include Simple Truth and Simple Truth Organic.

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