Green Mountain's Grand Victory in 3Q - Analyst Blog
28 Juillet 2011 - 2:53PM
Zacks
Green Mountain Coffee Roasters (GMCR) recorded
a robust third quarter 2011 earnings of 49 cents per share that
shot up by 140% from 21 cents posted in the year-ago period. It
also beat the Zacks Consensus Estimate of 36 cents by 11.11%.
The upswing came on the back of success of Keurig Single-Cup
Brewing System coupled with the company’s flashing appearance in
spring advertising and brand support programs, designed to raise
awareness of the Keurig Single-Cup Brewing system and “Brew Over
Ice” Teas and Coffees, perfect for the summer months.
On a reported basis, including one-time items, earnings came in
at 37 cents per share, up 206% from 31 cents delivered in the
previous year.
Considering the results posted in the third quarter 2011, Green
Mountain projects fourth quarter 2011 adjusted earnings in the
range of 44 cents to 48 cents a share and the ensuing fiscal 2011
adjusted earnings within $1.63–$1.67. The company estimates fiscal
2012 earnings to be in the range of $2.55 to $2.65 per diluted
share.
Whereas Zacks Consensus Estimate is 43 cents for the fourth
quarter and $1.47 for full fiscal 2011. The estimate for the next
year is $2.18.
Consolidated Revenue and Margins
GreenMountain’s quarterly net sales surged 127% to $717.2
million compared with $316.6 million in the prior-year period,
reflecting robust sales growth in total K-Cup portion pack, Keurig
brewer and accessory sales.
Almost 82% of the net sales were contributed by the Keurig
brewing system and its recurring portion pack sales, including
Keurig-related accessory. Rest of the total sales came from bagged
coffee and office coffee services business.
GreenMountainforecasts total net sales growth of 100%-105% in
the fiscal 2011 and also plans to achieve consolidated net sales
growth of 98%-100%, compared to the previous estimate of
82%-87%.
On a year-ago basis, operating income climbed 185% to $131.9
million, while operating margin expanded 380 basis points in the
quarter, due to a price increase in May 2011 that was implemented
late in the third quarter of fiscal 2011. The price hike helped in
generating 13% of total net sales in the quarter discussed.
Other Financial Updates
The company exited the year with cash and short-term cash
investments of $106.8 million as on June 25, 2011, up from $64.5
million on March 26, 2011.
Inventories increased to $417.5 million from $177.2 million,
driven by the company’s effort to have sufficient supply of brewers
and K-Cup portion packs for the 2011 holiday season.
While accounts receivable increased 78% due to continuing sales
growth and the addition of Van Houtte related accounts receivables,
debt outstanding decreased to $421.9 million as on June 25, 2011
from $1.06 billion as on March 26, 2011 on repayment of debt with
proceeds from the Company’s common stock offering in May 2011.
Our Take
While Green Mountain’s sound position in a prospering industry
and its strategic acquisitions encourages us immensely, coffee’s
vulnerability to highly volatile global prices and presence of
tough competitors like Peet's Coffee & Tea
Inc. (PEET) and Starbucks Corporation
(SBUX) draws some lines of worry on our forehead.
Currently, we prefer to rate the stock as Neutral. Green
Mountain holds the Zacks #1 Rank, which translates into a
short-term Strong Buy rating.
GREEN MTN COFFE (GMCR): Free Stock Analysis Report
PEETS COFFE&TEA (PEET): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
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