Green Mountain Coffee Roasters Inc.
) is set to report fourth-quarter 2013 results on Nov 20. Last
quarter, it posted a 5.1% positive surprise. Let us see how
things are shaping up for this announcement.
Factors to Consider this quarter
We believe that the intensifying competitive scenario could
bar the company from continuing its earnings streak in the fourth
As per market research firm, Neilsen and OTR Global, Green
Mountain's K-cup sales growth, which forms a major part of GMCR's
revenues, is losing shares to companies like
Treehouse Foods Inc.
(THS). Green Mountain is expected to lose market share as its
signature K-cups and Keurig brewers are facing intense
competition from private labels.
Moreover, several other coffee makers like Peet's and Nescafe
have entered the single-serve coffee world and Green Mountain is
expected to face competition from their brewers as well. Many
Walmart Stores Inc
. (WMT) and
Best Buy Inc.
(BBY) are slashing prices of the Vue brewers following lower
sales for several months
.However, GMCR is trying hard to upgrade its Keurig brewer and
make it more user-friendly and compatible for both K-cups and Vue
packs. The company is planning to expand into untapped
international markets in the upcoming year. Moreover, the company
is opening its Keurig stores. These endeavors may offset the
difficult competitive environment in the single serve market and
help GMCR stay afloat in the coming quarter.
Our proven model does not conclusively show that Green Mountain
is likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP
: That is because the Most Accurate estimate stands at 70 cents
while the Zacks Consensus Estimate is higher at 75 cents. Hence
the difference is -6.67%.
: GMCR's Zacks #3 Rank (Hold) lowers the predictive power of ESP
because the Zacks #3 Rank when combined with a negative ESP makes
surprise prediction difficult. We caution against stocks with
Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings
announcement, especially when the company is seeing negative
estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
Best Buy Co., Inc.
) with Earnings ESP of +9.09% and a Zacks Rank #1 (Strong
) with Earnings ESP of +16.67% and a Zacks Rank #2 (Buy)
Trina Solar Limited
) with Earnings ESP of +77.78% and a Zacks Rank #2 (Buy)
BEST BUY (BBY): Free Stock Analysis Report
GREEN MTN COFFE (GMCR): Free Stock Analysis
TIVO INC (TIVO): Free Stock Analysis Report
TRINA SOLAR LTD (TSL): Free Stock Analysis
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