United Natural Foods (UNFI) versus Krispy Kreme Doughnuts (NYSE:KKD) Critical Analysis

Krispy Kreme Doughnuts (NYSE: KKD) and United Natural Foods (NASDAQ:UNFI) are both non-cyclical consumer goods & services companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.

Risk and Volatility

Krispy Kreme Doughnuts has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500. Comparatively, United Natural Foods has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Krispy Kreme Doughnuts and United Natural Foods, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Krispy Kreme Doughnuts 0 0 0 0 N/A
United Natural Foods 5 8 5 0 2.00

United Natural Foods has a consensus price target of $41.71, indicating a potential downside of 20.55%. Given United Natural Foods’ higher probable upside, analysts clearly believe United Natural Foods is more favorable than Krispy Kreme Doughnuts.

Earnings and Valuation

This table compares Krispy Kreme Doughnuts and United Natural Foods’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Krispy Kreme Doughnuts N/A N/A N/A $0.47 44.68
United Natural Foods $9.27 billion 0.26 $130.15 million $2.56 18.67

United Natural Foods has higher revenue and earnings than Krispy Kreme Doughnuts. United Natural Foods is trading at a lower price-to-earnings ratio than Krispy Kreme Doughnuts, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Krispy Kreme Doughnuts and United Natural Foods’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Krispy Kreme Doughnuts 6.90% 15.58% 11.41%
United Natural Foods 1.40% 8.10% 4.50%

About Krispy Kreme Doughnuts

Krispy Kreme Doughnuts, Inc. is a retailer and wholesaler of doughnuts, complementary beverages, and treats and packaged sweets. The Company’s principal business includes owning and franchising Krispy Kreme stores, at which a range of doughnuts, including the Company’s Original Glazed doughnut, together with complementary products, including an array of coffees and other beverages. The Company operates through four business segments: Company Stores, Domestic Franchise, International Franchise and KK Supply Chain. The Company Stores segment includes the doughnut shops operated by the Company. The Domestic Franchise segment consists of the Company’s domestic store franchise operations and the licensing of Krispy Kreme products domestically. The International Franchise segment consists of the Company’s international store franchise operations. The KK Supply Chain segment produces doughnut mixes and manufactures doughnut-making equipment.

About United Natural Foods

United Natural Foods, Inc. is a distributor and retailer of natural, organic and specialty products. The Company’s segments include Wholesale and Other. The Wholesale segment is engaged in the national distribution of natural, organic and specialty foods, produce and related products in the United States and Canada. The Other segment includes a retail division, which engages in the sale of natural foods and related products to the general public through retail storefronts on the east coast of the United States; a manufacturing division, which engages in importing, roasting and packaging of nuts, seeds, dried fruit and snack items, and its branded product lines. Its operations consist of three operating divisions: Wholesale Division, Retail Division, and Manufacturing and Branded Products divisions. As of July 30, 2016, the Company had offered 100,000 natural, organic and specialty foods, and non-food products, consisting of national, regional and private-label brands.

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