Comparing Krispy Kreme (NASDAQ:DNUT) and Wendy’s (NASDAQ:WEN)

Wendy’s (NASDAQ:WEN) and Krispy Kreme (NASDAQ:DNUT) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Wendy’s and Krispy Kreme”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.18 billion	0.57	$165.07 million	$0.66	9.88
Krispy Kreme	$1.52 billion	0.34	-$515.77 million	($0.56)	-5.30

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

Profitability

This table compares Wendy’s and Krispy Kreme’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	5.72%	115.31%	2.70%
Krispy Kreme	-6.16%	-1.17%	-0.31%

Risk & Volatility

Wendy’s has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Krispy Kreme has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Insider and Institutional Ownership

86.0% of Wendy’s shares are owned by institutional investors. Comparatively, 81.7% of Krispy Kreme shares are owned by institutional investors. 17.1% of Wendy’s shares are owned by company insiders. Comparatively, 1.6% of Krispy Kreme shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Wendy’s and Krispy Kreme, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	5	12	2	0	1.84
Krispy Kreme	3	0	2	0	1.80

Wendy’s currently has a consensus target price of $7.69, suggesting a potential upside of 17.96%. Krispy Kreme has a consensus target price of $4.33, suggesting a potential upside of 45.90%. Given Krispy Kreme’s higher possible upside, analysts clearly believe Krispy Kreme is more favorable than Wendy’s.

Summary

Wendy’s beats Krispy Kreme on 11 of the 13 factors compared between the two stocks.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.

About Krispy Kreme

Krispy Kreme, Inc., together with its subsidiaries, produces doughnuts in the United States, the United Kingdom, Ireland, Australia, New Zealand, Mexico, Canada, Japan, and internationally. The company operates through three segments: U.S., International, and Market Development. The company offers doughnut experiences through hot light theater and fresh shops, delivered fresh daily branded cabinets and merchandising units within grocery and convenience stores, quick service restaurants, club memberships, drug stores, and ecommerce, as well as through its branded sweet treat line comprising Krispy Kreme branded sweet treats. It also provides cookies under the Insomnia Cookies brand, cookie cakes, ice cream, cookie-wiches, and brownies; and operates Krispy Kreme company-owned shops and franchise shops. The company was formerly known as Krispy Kreme Doughnuts, Inc. and changed its name to Krispy Kreme, Inc. in May 2021. Krispy Kreme, Inc. was founded in 1937 and is based in Charlotte, North Carolina.