Krispy Kreme: Avoid These Stale Doughnuts
Summary
- Krispy Kreme's shares have plummeted by over 60%, and despite the drop, the stock's valuation remains high at 79.7x Fwd P/E, raising solvency concerns.
- The partnership with McDonald's has underperformed, leading to a pause in expansion plans, which significantly impacted investor confidence and share prices.
- Krispy Kreme's financial health is precarious, with nearly $1 billion in debt and a net leverage ratio of 6.1x, risking potential covenant breaches.
- Due to poor financial performance, suspended guidance, and halted dividends, I recommend investors stay away from Krispy Kreme shares despite the low prices.
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