GNC (NYSE: GNC) and Krispy Kreme Doughnuts (NYSE:KKD) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Dividends

GNC pays an annual dividend of $0.20 per share and has a dividend yield of 4.1%. Krispy Kreme Doughnuts does not pay a dividend. GNC pays out -3.7% of its earnings in the form of a dividend. GNC has increased its dividend for 4 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
GNC -15.11% -133.37% 3.95%
Krispy Kreme Doughnuts 6.90% 15.58% 11.41%

Insider & Institutional Ownership

61.9% of GNC shares are held by institutional investors. 1.9% of GNC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares GNC and Krispy Kreme Doughnuts’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GNC $2.54 billion 0.13 -$286.25 million ($5.46) -0.89
Krispy Kreme Doughnuts N/A N/A N/A $0.47 44.68

Krispy Kreme Doughnuts has lower revenue, but higher earnings than GNC. GNC 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.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GNC 5 2 0 0 1.29
Krispy Kreme Doughnuts 0 0 0 0 N/A

GNC currently has a consensus target price of $7.58, indicating a potential upside of 56.04%. Given GNC’s higher possible upside, analysts plainly believe GNC is more favorable than Krispy Kreme Doughnuts.

Risk & Volatility

GNC has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Krispy Kreme Doughnuts has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500.

Summary

GNC beats Krispy Kreme Doughnuts on 7 of the 12 factors compared between the two stocks.

About GNC

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company’s operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.

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.

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