Reviewing Krispy Kreme (NASDAQ:DNUT) & Wendy’s (NASDAQ:WEN)

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

Profitability

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

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

Volatility & Risk

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

Analyst Ratings

This is a summary of current ratings and target prices for Krispy Kreme and Wendy’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Krispy Kreme	3	0	1	0	1.50
Wendy’s	5	12	2	0	1.84

Krispy Kreme presently has a consensus target price of $4.33, suggesting a potential upside of 50.46%. Wendy’s has a consensus target price of $7.42, suggesting a potential upside of 19.90%. Given Krispy Kreme’s higher possible upside, equities research analysts plainly believe Krispy Kreme is more favorable than Wendy’s.

Insider & Institutional Ownership

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Krispy Kreme	$1.52 billion	0.33	-$515.77 million	($0.56)	-5.14
Wendy’s	$2.20 billion	0.54	$165.07 million	$0.66	9.38

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.

Summary

Wendy’s beats Krispy Kreme on 12 of the 14 factors compared between the two stocks.

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.

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.