By Jonathan Heller, TheStreet

Krispy Kreme's (KKD) doughnuts are so good that some folks evidently use them as hamburger buns. Really.

Great doughnuts, however, don't necessarily translate into a great stock. The company went public back in 2000 at $21 per share amid much fanfare, opened at $32 and rose to $37 on the first day of trading. By December of 2001, the share price had quadrupled.

After it topped out in December 2003 in the $49 range, it's been pretty much all downhill since, and this former high flyer now trades around $4.

Name a bad business development, and it probably happened to Krispy Kreme. Overexpansion, ridiculous payments to acquire stores from franchisees, poor accounting practices and controls, restatements, bad management, class-action lawsuits, declining sales and disappearing profits . . . the list goes on.

• Find a new broker and start trading online 

The losses piled up, year after year until, all but forgotten, the stock bottomed at $1.08 in February 2009, a shadow of its former self. Talk about the near destruction of a brand. If this is not already a business-school case study, it should be.

This stock went from growth darling to near oblivion. I, for one, had forgotten about it. Krispy Kreme's presence in the area I live all but disappeared as the company closed stores and ended relationships with supermarket chains that carried the company's product.

Prior to 2010's break-even results, the company was in the red for five years. But now, with two consecutive positive quarters under its belt, Krispy Kreme may be making a comeback.

Last quarter, revenue fell 1.4%, but that included the effects of refranchising some stores -- and were it not for that, revenue would have been up 0.4%. More importantly, net income rose 147%, and the company earned $4.5 million, or $0.07 per share. Same-store sales showed progress, rising 3.4%.

The company also raised its guidance for fiscal 2011 operating income to a range of $11 million to $15 million from $10 million to $13 million.

We'll get a glimpse today of whether the progress has continued, as the company is due to report second-quarter earnings today after the market closes. Consensus estimates are calling for a break-even quarter on revenue of $84 million. But with just three analysts currently covering the stock, there's certainly room for a surprise, either way.

Today's Krispy Kreme is a leaner version of what it was back in the 2000s. The company closed 240 U.S. stores between 2004 and 2009 and has a greater presence internationally. As of January, the company had 224 U.S. and 358 international locations. Of the total 582 stores, 499 are franchised.

This company will probably not become the next Dunkin' Donuts, but with a solid brand name and a history that dates back to 1937, there's no reason it can't thrive, especially if management doesn't repeat the mistakes of the recent past.

Finally, Krispy Kreme has done a good job of cleaning up its balance sheet over the years. As of last quarter, cash stood at $20.1 million and debt at $43.2 million, $42.5 million of it long term.

From an asset perspective, the company owns the land and buildings for 42 locations, the building in 23 locations, plus two facilities in Winston-Salem, N.C., with a total of 250,000 square feet.

The total package has a current market cap of $278 million and an enterprise value of $301 million. This might ultimately make a nice acquisition candidate for someone looking to further build a brand portfolio. You never know.

Related Articles

• How to avoid a bad ending with cult stocks
• 10 bank acquisition targets
• Intel loses its footing