Submitted by: Submitted by iluv4
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Words: 1845
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Category: Business and Industry
Date Submitted: 11/27/2010 04:35 PM
Krispy Kreme Doughnuts (KKD) is a brand name that familiar with many people who like doughnuts. The company went public in April 2000 and was one of the largest IPO in recent years. At that time, its share price started at $40.36 and generated nearly $500 million for the company. With that amount, KKD had an ambition to expand their stores from 144 to 500 over the next five years.By looking at the financial statements, exhibit 1 and 2, we can tell that KKD was doing very well in the years 2000, 2001, 2002, 2003, and the beginning of 2004. Its net income grew almost 10 times, started with $5,956 million in 2000 and turned out to be $57,087 million in February 2004. Besides, their earning per share (EPS) also increased 6 times, from 0.15 in 2000 to 0.92 in beginning of 2004.
Everything seemed so promising for KKD’s stock price; until May 7, 2004, the company told investors to expect 10% lower in earnings. Following by a Wall Street Journal’s story described Krispy Kreme’s accounting treatment for franchise acquisition on May 25.Exhibit 4 shows the percentage of analysts’ recommendation for KKD’s stock from 2001 to 2005. In June 14, 2001, the percentage recommending for buy, sell, and hold were 80%, 20%, and 0%, respectively. However, in January 20, 2005, these percentages were dramatically changed to 14.3%, 57.1%, and 28.6%. Most analysts were losing their confidence with the performance of KKD’s stock; nevertheless, 42.9% of them still recommend investors to either buy or hold the stock. In the other words, about half of the analysts still have faith in KKD stock’s future performance.
Krispy Kreme Doughnuts (KKD) is a brand name that familiar with many people who like doughnuts. The company went public in April 2000 and was one of the largest IPO in recent years. At that time, its share price started at $40.36 and generated nearly $500 million for the company. With that amount, KKD had an ambition to expand their stores from 144 to 500 over the next five years.By...