Krispy Kreme Q4 Earnings Preview: Is Good News Already Baked In?

| About: Krispy Kreme (KKD)

KKD is set to release its 4th quarter results shortly after the close of market on Thursday April 15th, followed by a 4:30 pm EST conference call. There are no analyst estimates because KKD currently has no analyst coverage. From the way the stock has performing lately (it just reached a fresh two year high), the news might be better than expected.

My take: Since nobody else wants to step up to the plate forecasting KKD’s results, I suppose I’ll take a crack at it. Look for the Donut maker to generate fourth quarter sales of $86.1 million (representing a 3% sequential gain, but a 6% year on year drop) producing earnings of 2 cents. This is predicated on KKD delivering a gross profit margin of 11.5%, G&A costs of 7.1% and interest charges of $2.1 million. Throw in about $2.5 million for depreciation and income tax and, there you have it.

Shorts could get fried: There are still 2.4 million shares short, so if we get any good news at all, we could see a full blown short squeeze develop as frantic covering takes place. This, along with fresh institutional buying could launch the shares 20% higher in a single session. The question is: has the good news already been baked (or should I say fried) into the share price? Probably not.

Disclosure: Long