December 24, 2025 — Winston-Salem, NC The doughnut world is buzzing this Christmas Eve as Krispy Kreme, Inc. (NASDAQ:DNUT) finds itself under the magnifying glass of Wall Street’s top analysts. After a tumultuous year that saw the iconic brand’s stock price crumble from double digits to the low single digits, a glimmer of hope emerged today. Zacks Research has officially upgraded Krispy Kreme from a “Strong Sell” to a “Hold,” signaling that the worst of the “sugar crash” might finally be in the rearview mirror.
But for investors eyeing a entry point at current levels, the question remains: Is this $65 million Japan divestiture and the recent earnings beat enough to justify a buy, or is the company’s massive debt load still a recipe for disaster?
The Upgrade: Why Zacks Shifted from “Strong Sell” to “Hold”
The upgrade by Zacks Research comes at a critical juncture for the North Carolina-based doughnut giant. For much of 2025, DNUT was plagued by a “Strong Sell” rating due to widening losses and a balance sheet that looked as bloated as a jelly-filled doughnut. However, the move to a “Hold” rating suggests that the company’s fundamental “bottom” may have been reached.
Key Upgrade Drivers:
- Earnings Surprise: In its most recent Q3 2025 report, Krispy Kreme posted an adjusted EPS of $0.01, smashing the consensus analyst estimate of a $0.06 loss. This $0.07 swing into the black provided the first real evidence that CEO Josh Charlesworth’s turnaround plan is gaining traction.
- Strategic Divestiture: The recent announcement that Krispy Kreme is selling its Japan operations to Unison Capital for $65 million is a masterclass in “deleveraging.” By offloading these assets, the company is pivoting toward a “capital-light” franchise model, using the proceeds to chip away at its $1.45 billion debt pile.
- Improving Margins: Despite a slight revenue dip of 1.2% year-over-year to $375.3 million, adjusted EBITDA rose 17% to $40.6 million. This indicates that the company is becoming leaner and more efficient at converting doughnuts into dollars.
By the Numbers: Fundamental Analysis of DNUT
While the upgrade is positive news, the raw data reveals a company still in the middle of a high-stakes financial diet. Krispy Kreme’s stock opened at $4.19 today, hovering near its 52-week low of $2.50, and miles away from its yearly high of $10.06.
The Balance Sheet Reality Check
| Metric | Value | Analyst Sentiment |
| P/E Ratio | -1.40 | Negative (No current earnings) |
| Debt-to-Equity | 1.31 | High (Heavy reliance on borrowing) |
| Quick Ratio | 0.30 | Weak (Short-term liquidity concerns) |
| Net Margin | -33.27% | Poor (GAAP losses still significant) |
| Average Price Target | $5.51 | 31.6% Upside from current price |
The Altman-Z score of 0.19 remains a major red flag, indicating a continued risk of financial distress if the turnaround doesn’t accelerate. However, the market seems to be pricing in a recovery; the 50-day moving average of $4.02 has finally crossed above recent lows, suggesting a technical base is forming.
The Institutional “Hidden Hand”
Despite the retail skepticism, the “smart money” is quietly doubling down. Institutional investors and hedge funds now own approximately 81.72% of the company’s outstanding shares.
In the third quarter of 2025, several heavy hitters made notable moves:
- BNP Paribas Financial Markets remains the largest holder with nearly 9% of the company.
- Mariner LLC increased its stake by a staggering 98.7%.
- New Positions: Firms like Keel Point LLC and PharVision Advisers LLC opened fresh positions, signaling that professional managers see value in the sub-$5.00 price range.
Market Outlook: Is DNUT a “January Top Pick”?
MarketBeat recently previewed its “Top Five Stocks to Own in January,” and while Krispy Kreme didn’t make that exclusive list, it has become a favorite for contrarian investors. The consensus rating currently sits at “Hold,” with 4 “Buy” ratings, 6 “Hold” ratings, and 2 “Sell” ratings.
The bull case for 2026 relies heavily on the McDonald’s partnership expansion and the “Hub and Spoke” delivery model. If Krispy Kreme can successfully refranchise international markets and focus on its high-margin U.S. fresh delivery business, the $5.51 price target might actually be conservative.
Potential Catalysts to Watch:
- Debt Reduction Milestones: Any further asset sales or debt restructuring.
- Q4 Earnings (Feb 2026): Analysts are projecting an EPS of $0.02. A second consecutive beat could trigger a massive short squeeze.
- Inflation Cooling: As the CPI rose only 2.7% in November (below the 3.1% forecast), lower input costs for sugar and flour could boost margins significantly in 2026.
Final Verdict
Krispy Kreme is no longer the “Strong Sell” it was six months ago. The Zacks upgrade to “Hold” reflects a company that has stopped the bleeding and is beginning the long process of rehabilitation. For investors with a high risk tolerance, the current $4.19 entry point offers a significant discount compared to the brand’s global reach and $717 million market cap.
However, until the debt-to-equity ratio moves closer to industry standards, DNUT remains a “show-me” story. It’s a sweet brand with a sour balance sheet—but for the first time in a year, the glaze is starting to look a little shinier.