On Apr 10, 2013, Zacks Investment Research upgraded
Green Mountain Coffee Roasters Inc.
) to Zacks Rank #1 (Strong Buy).
With a stellar fiscal 2013-first quarter performance,
efficient measures, strategic agreements to drive out competition
following the expiry of the K-cup patents and continuous
innovations, this coffee maker is an attractive investment
opportunity. The stock's return was 32.2% in the past one year.
Green Mountain's shares hit a new 52-week high of $59.30 on Apr
Why the Upgrade?
Green Mountain has been witnessing rising earnings estimates
on the back of strong fiscal 2013 first quarter results and
upgraded guidance for fiscal 2013. Moreover, this well-known
coffee maker delivered positive earnings surprises in all the
last 4 quarters with an average beat of 19.2%. The long-term
expected earnings growth rate for this stock is 19.4%.
The coffee maker delivered robust first quarter adjusted
earnings (excluding amortization of identifiable intangibles and
SEC-inquiry related expenses) of 76 cents per share that
surpassed the year-ago quarter earnings of 60 cents by 27%. It
also beat the Zacks Consensus Estimate of 65 cents by 17% on the
back of solid top-line growth and lower interest expense.
Green Mountain is expected to deliver robust fiscal
2013-second quarter results, scheduled to report on May 8,
considering its upbeat first quarter 2013 results, initiatives to
rule out competition, new product roll outs, and better
visibility for fiscal 2013.
For the second quarter of fiscal 2013, the company expects
adjusted earnings per share in the range of 70-75 cents and sales
growth in the range of 14% to 18%. The guidance reflects the
company's continuous efforts to increase brand investments and
The company is optimistic about fiscal 2013. It raised
adjusted earnings outlook to the range of $2.72 to $2.82 per
share, up from the prior guidance of $2.64 to $2.74 per share.
The company expects net sales growth in the range of 15% to 20%
over fiscal 2012.
Over the last 60 days, Zacks Consensus Estimate for fiscal
2013 moved up by one cent to $2.81 per share on the back of an
upward estimate revision by one of the ten analysts covering the
stock. For fiscal 2014, the Zacks Consensus Estimate moved up by
two cents to $3.21 per share on the back of an upward estimate
revision by one of the eight analysts covering the stock.
Several positive developments led to the upgrade for this
coffee maker. In Mar 2013, the company entered into a strategic
partnership with Unilever North America, whereby, the latter will
distribute its Lipton tea in K-cups and Vue packs. The pact
furthers Green Mountain's goal of sustaining its dominance in the
single-serve brewing market even after the expiration of patents
related to its K-cups in Sep 2012.
Green Mountain is focusing on its products and putting its
efforts to turn around its business after its K-cup patents
expired in Sep 2012. Apart from rolling out new products, the
company is upgrading its Keurig brewing system. It launched
Keurig Vue 500 in Mar 2013. Apart from V500, the Keurig Vue
Brewing System has provided its customers with advanced brewing
options in the form of its Vue 700 and Vue 600 machines.
GREEN MTN COFFE (GMCR): Free Stock Analysis
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