Tim Hortons Inc. may not have to look over its shoulder just yet, but U.S. doughnut giant Krispy Kreme Doughnuts Inc. is staging a comeback.
The purveyor of sugary delights, based in Winston-Salem, N.C., is expected to release rosy second-quarter results on Thursday. Seven out of 11 analysts following the stock have a “buy” rating or equivalent on it, according to Bloomberg.
“We’ve been recommending this stock since July of last year when we upgraded the stock to overweight,” analyst Will Slabaugh of Stephens Inc. said.
Krispy Kreme shares were a hot item more than a decade ago, reaching a peak of $44.20 (U.S.) in 2001, only to fall to $1.29 at their depths in 2009. The stock has been climbing back, more than doubling over the past year, and closed Friday at $22.60.
“It had been underperforming in the market for reasons that we did not see as fundamental to its operations,” Mr. Slabaugh said. “We thought that sales growth, that unit growth, that all these fundamental things were accelerating within the company, yet the stock was underperforming.”
Krispy Kreme’s has expanded its footprint to cover more than 770 locations in 22 countries around the world. Its revenue has grown from $346-million in fiscal 2010 to more than $435-million in fiscal 2013and it may be benefiting from consumers’ desire for affordable treats at a time of economic restraint.
In Canada, however, Tims is still doing a better job than Krispy Kreme, said Maureen Atkinson, a retail analyst with J.C. Williams Group.
Tims’ product appeals more to Canadian tastes, she said.