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It may be difficult to resist a freshly baked Krispy Kreme doughnut, but investors would do well to avoid buying the beaten-down stock.

After Monday's close, Krispy Kreme Doughnuts (ticker: KKD) reported fiscal third-quarter earnings of $6.8 million, or nine cents a share, up from seven cents a share in the year-ago period. Excluding one-time items, adjusted per-share earnings rose to 16 cents from 12 cents. Revenue climbed 6.7% to $114.2 million. Analysts were looking for earnings per share of 15 cents on $115 million in sales.

However, investors were spooked by the company's full-year guidance for fiscal 2015, which calls for EPS between 71 cents and 76 cents. Wall Street was expecting 79 cents a share.

The stock Tuesday tumbled 15.8% to $20.67 in morning trading on the report. While Krispy Kreme is a volatile stock that regularly sees big swings, and has been able to rally despite a rich valuation, we think investors should pass.

Although same-store sales rose by 3.3% in the most recent quarter, which ended Nov. 3, that growth was below most analysts' estimates, and quarter-to-date metrics indicate that the fourth quarter might also disappoint. Wedbush Securities analyst Nick Setyan writes that same-store sales growth was just 1.5% in the first three weeks of the quarter, weaker than expected but "realistic," given that the firm faces tough comparisons going forward.

While Krispy Kreme's rapid expansion has allowed growth estimates to expand, the company may be experiencing some growing pains, as management said that cannibalization and honeymoon effects from new stores in several markets may have hurt third-quarter same-store sales to the tune of 1.5%.

Krispy Kreme has a history of issuing conservative guidance, so there may be room yet for the company to revise its disappointing full-year forecast. Nonetheless,Tuesday's big dip shows how sensitive the stock is to any negative news.

This column has been skeptical of Krispy Kreme in the past, warning this summer that the stock was priced to perfection. (See Barron's Take, "Hole in the Krispy Kreme Story," July 15.) The stock has edged up just 1.7% since that article's publication, while the Standard & Poor's 500 rose nearly 7% in the same period.

Trading at nearly 27 times forward earnings, the stock looks pricey. While a 25% long-term growth rate may seem to justify that high multiple, that estimate is based on just one analyst's opinion.

Sidoti & Co.'s Michael Halen downgraded Krispy Kreme to Neutral just over a week ago, writing that its rich valuation leaves "the stock vulnerable should Krispy Kreme's expansion slow or pre-opening costs dent profitability…the risk/reward ratio is no longer attractive."

The company, however, has logged 20 consecutive quarters of same-store sales growth while margins continue to grow. In the long term, its domestic and international expansion should boost profitability, while coffee sales have also been positive.

Yet Krispy Kreme has already run up about 165% in the past year. Given its high valuation and Wall Street's lofty valuations, any investors buying on the dip will need an iron stomach.

E-mail: teresa.rivas@barrons.com