Krispy Kreme (Krispy Kreme) Predictability Rank

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What is Krispy Kreme Predictability Rank?

Not Rated

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Krispy Kreme Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Krispy Kreme (Krispy Kreme) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Retail - Defensive » Krispy Kreme Inc (NAS:DNUT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

9YM:Germany

Address

2116 Hawkins Street, Charlotte, NC, USA, 28203

Website

https://www.krispykreme.com

Krispy Kreme Inc is a sweet treat brands company. The company's Original Glazed doughnut is recognized for its hot-off-the-line, melt-in- your-mouth experience. It operates in 30 countries through its network of fresh Doughnut Shops, partnerships with retailers, and a growing ecommerce and delivery business. The company conducts its business through the following three reported segments namely U.S. and Canada, includes all operations in the U.S. and Canada, Insomnia Cookies shops, and the Branded Sweet Treat Line; International includes operations in the U.K., Ireland, Australia, New Zealand, and Mexico; and Market Development includes franchise operations across the globe, as well as operations in Japan.

Executives

Raphael Duvivier	officer: Chief Development Officer	2116 HAWKINS STREET, CHARLOTTE NC 28203
Kelly P Mcbride	officer: Chief Accounting Officer	2116 HAWKINS STREET, CHARLOTTE NC 28203
Jeremiah Ashukian	officer: EVP & Chief Financial Officer	2116 HAWKINS STREET, CHARLOTTE NC 28203
Philip Telfer	director	356 STATE STREET, EAST ALBURY C3 NSW 2640
Michael J. Tattersfield	director, officer: President and CEO	2285 CLARK DRIVE, VANCOUVER A1 V5N 3G9
Gerhard W. Pleuhs	director	C/O KRAFT FOODS INC., THREE LAKES DRIVE, NORTHFIELD IL 60093
Marissa Andrada	director	C/O KATE SPADE & COMPANY 2 PARK AVENUE, NEW YORK NY 10016
Jab Indulgence B.v.	10 percent owner	14TH FLOOR, 20 EASTBOURNE TERRACE, LONDON X0 W2 6LG
Olivier Goudet	director, other: Chairman of the Board	350 FIFTH AVENUE, NEW YORK NY 10118
Jab Holdings B.v.	10 percent owner	PIET HEINKADE 55, AMSTERDAM P7 NL 1019 GM
Debbie Sharell Roberts	director	204 W. 59TH STREET, BURR RIDGE IL 60527
Patricia Capel	director	C/O KRISPY KREME, INC., 2116 HAWKINS STREET, CHARLOTTE NC 28203
Josh Charlesworth	officer: COO and CFO	C/O KRISPY KREME, INC., 2116 HAWKINS STREET, CHARLOTTE NC 28203
David J. Deno	director	111 4TH AVENUE NORTH #503, MINNEAPOLIS MN 55402
Andrew G Skehan	officer: North America President	5555 GLENRIDGE CONNECTOR, NE, SUITE 300, ATLANTA GA 30342