Ask Matt: Will Krispy Kreme be hot again?

Q: Will Krispy Kreme be hot again?

A: Donut lovers know when Krispy Kreme’s food is most fresh - a light literally turns on. But it’s not so easy for investors to know when to be interested in the donut chain’s stock.

Shares of Krispy Kreme have been trying to regain their freshness this year - but the company’s flagging growth and high valuation get in the way. Following the company’s report Thursday of disappointing quarterly revenue, shares fell more than 5% to roughly $14.50 a share. The stock has gone nowhere this year and has lost nearly a third of its value over the past 12 months. The most recent quarter’s results didn’t help. Krispy Kreme’s revenue grew just 4% in the quarter to just over $130 million, below expectations. Longer-term, revenue last fiscal year ended in January 2016 rose just 5.8%, which is down from the company’s 6.5% growth in the previous fiscal year and well below the 11.4% revenue growth it reported in fiscal 2012. Even as growth slows, the company’s valuation of 33 times trailing earnings makes the stock more expensive than the market. Analysts, though, think eventually this stock will heat up. Revenue is seen growing 5.6% this year, but analysts still think the stock could worth $20.58 in 18 months if profit jumps 12.5% as expected.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz