Krispy Kreme Doughnuts (NYSE: KKD, $17.38) is scheduled to report earnings following the close of Wednesday’s trading session.
Analysts are calling for $0.22 EPS on revenues of $135.99 million, compared to actual EPS of $0.23 and revenue of $121.58 million for the same quarter on year prior.
KKD stock hasn’t been a treat for the bulls in 2015 – the stock is down nearly 12% year to date. The stock has traded in a 52-week range of $14.82-$22.32, having logged it’s recent high in February of this year.
Krispy Kreme has also seemingly fallen into a habit of lowering guidance on earnings calls. The stock has fallen following the past 4 quarter’s earnings announcements, and traded lower 6 of the past 8 quarters.
Historically, the stock has moved an average of 11.2% on earnings announcements. KKD has no weekly options, so we must turn to the June serial options expiring in 10 days.
The KKD Jun 17 Straddle is implying a move of 9.1%, while the 18 straddle is implying a slightly higher move of 9.2%.
Trade Set-up:
Buy the KKD June 18-19 Bull Call Spread for $0.30
Risk: $30 per 1 Lot
Reward: Up to $70 per 1 Lot
Break-even (stock price at expiration) $18.30
