Green Mountain Coffee Roasters (
was a pretty hot stock for years, though its growth trajectory has
slowed down recently. In fact, over the past two years, the company
has seen a gain of just 16% as competition has really knocked this
stock down a peg.
However, investors have started to see a turnaround lately, as the
company has seen a series of earnings beats, and a strong stock
performance. Shares are up more than 28% in the past 90 days while
the previous quarter saw a beat of 20% on the earnings front. This
recent surge really put pressure on GMCR to deliver this
earnings season and to keep up the strong momentum.
GMCR in Focus
Green Mountain didn't disappoint, as the company beat estimates,
and crushed comparisons to the year ago time frame. The company
also saw revenues ahead of the year-ago period, though actual
revenues for the quarter missed estimates.
While GMCR saw solid earnings, the real news on the day was the
company's tie up with
. The beverage giant agreed to take a 10% stake in Green Mountain,
while it will also work with the company in order to develop its
Keurig Cold at-home beverage system.
This partnership looks to work well for both companies, as it will
help GMCR to expand its cold beverage lineup, and it will also
allow Coca-Cola to get into this growing segment too. However, it
could be downright terrible for
as the at-home carbonated beverage company could have some serious
competition in the near future.
Investors pushed SODA down close to 10% after-hours on the news,
keeping this Zacks Rank #5 (Strong Sell) company in the doldrums.
However, shares in GMCR spiked after hours on the news of the
Coca-Cola partnership with a gain of about 35%, while KO shares
added roughly 1% in the after hours session too.
Clearly, investors like the move from GMCR to partner with KO on
this cold-beverage system. While this might take a while to bring
to fruition, Coca-Cola K-cups could really help drive GMCR earnings
and open up a fresh market for KO as well.
The move might also help GMCR, a Zacks Rank #2 (Buy) stock,
to see an increase in earnings estimates for future years, as
analysts might want to increase their estimates following this bold
move. Recently, estimates had been trending lower for the next year
time frame before this announcement, though this looks to change
now, and could help GMCR to stay in 'Buy' territory.
The move to partner with Coca-Cola does come at a cost, as KO will
acquiring over 16 million newly issued shares at
just under $75/share
. This will obviously have a bit of a dilutive effect on GMCR,
though analysts and investors don't seem to be focusing on in this
Instead, it appears as though the idea of single-serve Coca-Cola is
dominating the headlines, and is breathing new life into GMCR
shares. If we can see 'pod-based' Coca-Cola in 2015, as the
companies are promising, it could really open up GMCR's business,
and help put this company back on a solid growth trajectory, much
to the chagrin of SodaStream investors who look to be in even more
trouble following this news.
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GREEN MTN COFFE (GMCR): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
SODASTREAM INTL (SODA): Free Stock Analysis
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