Q4 Preview: Could Green Mountain (GMCR) Brew Up Something Good as Shorts Swarm?


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Shares of Green Mountain Coffee Roasters (Nasdaq: GMCR) are lower Wednesday heading into its fourth-quarter earnings report, expected out after the market close. Green Mountain has set up a conference call for 5pm EST. To access its investor relations website for more info on the call, click the logo: .

The Street is looking for Green Mountain to report earnings of 48 cents per share on revenue of $760.48 million. The company reported earnings of 49 cents per share last quarter, and earnings of 22 cents produced in the same period last year.

Through the quarter, Green Mountain shares rose about 4 percent to $92.94 at the end of September. Green Mountain has taken a hit since then: shares are down 27 percent. Green Mountain has traded within a range of $29.55 to $115.98 over the last 52-week time frame.

Last quarter, Green Mountain reported a book value of $11.87 per share, with cash of 50 cents per share. The stock is currently trading for about 26x next years earnings expectations, compared with 33.3x for Peet's Coffee & Tea (Nasdaq: PEET) and 11.4x for Coffee Holding (Nasdaq: JVA).

Data from Bloomberg has 10 analysts with a Buy rating on Green Mountain, two at Hold, and one suggesting to Sell. The price target average is $117, with a low of $112 and high of $130.

Into the quarter, KeyBanc is bullish on the potential for Green Mountain and its Keuring machines. Recent data shows about 90 million U.S. households consume 2 cups of coffee per day; Keurig brewers are in only about 8 to 9 percent of U.S. households. KeyBanc is modling for a 22 percent penetration rate (not clear whether there is a separate metric for office/corporate use as well, either for small business or for executive offices).

For its model, KeyBanc took into consideration a lower attachment rate (K-Cups used per day), and that big-name partnerships (like with Starbucks (Nasdaq: SBUX)) will not lead to significantly lower margins.

KeyBanc is looking for earnings of 49 cents per share and sales of $776 million.

Notably, the firm recently made arguments against hedge fund giant David Einhorn and his short thesis on Green Mountain shares. Click here for more on that.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Green Mountain's past performance at Streetinsider's Green Mountain Blizzard Income Statement .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: GMCR , JVA , PEET , SBUX

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