Analyzing Krispy Kreme Doughnuts (KKD) and Sysco (SYY)

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

Dividends

Sysco pays an annual dividend of $1.32 per share and has a dividend yield of 2.2%. Krispy Kreme Doughnuts does not pay a dividend. Sysco pays out 60.0% of its earnings in the form of a dividend. Krispy Kreme Doughnuts has raised its dividend for 46 consecutive years.

Institutional and Insider Ownership

80.2% of Sysco shares are owned by institutional investors. 9.6% of Sysco shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Krispy Kreme Doughnuts and Sysco’s gross revenue, earnings per share (EPS) 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
Sysco $55.37 billion 0.56 $1.14 billion $2.20 27.05

Sysco has higher revenue and earnings than Krispy Kreme Doughnuts. Sysco 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.

Volatility and Risk

Krispy Kreme Doughnuts has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Sysco has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Krispy Kreme Doughnuts and Sysco, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Krispy Kreme Doughnuts 0 0 0 0 N/A
Sysco 0 7 6 0 2.46

Sysco has a consensus price target of $56.09, indicating a potential downside of 5.76%. Given Sysco’s higher possible upside, analysts plainly believe Sysco is more favorable than Krispy Kreme Doughnuts.

Profitability

This table compares Krispy Kreme Doughnuts and Sysco’s 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%
Sysco 2.12% 58.47% 7.68%

Summary

Sysco beats Krispy Kreme Doughnuts on 8 of the 13 factors compared between the two stocks.

Krispy Kreme Doughnuts Company Profile

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.

Sysco Company Profile

Sysco Corporation (Sysco) is a distributor of food and related products primarily to the foodservice or food-away-from-home industry. The Company’s segments include Broadline, SYGMA and Other. The Broadline segment includes its Broadline operations located in the Bahamas, Canada, Costa Rica, Ireland, Mexico and the United States. Broadline operating companies distribute a full line of food products and a range of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a range of non-food products to certain chain restaurant customer locations. The Other segment includes the Company’s specialty produce; custom-cut meat operations; lodging industry segments; a company that distributes specialty imported products; a company that distributes to international customers, and Sysco Ventures platform.

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