Green Mountain Soars but Falls Shy - Analyst Blog
10 Novembre 2011 - 9:30AM
Zacks
Green Mountain Coffee
Roasters (GMCR) reported robust fourth quarter 2011
results with its quarterly earnings per share (EPS) shooting up 96%
year on year to 47 cents. The specialty coffee and coffee maker’s
fiscal 2011 earnings soared 113% on a yearly basis to $1.64.
However, both fourth quarter and
fiscal 2011 EPS failed to surpass the Zacks Consensus Estimate of
48 cents and $1.66, respectively.
The year-on-year upswing came on
the back of success of Keurig Single-Cup Brewing System coupled
with strong holiday consumer demand in September
Considering the fourth quarter
results, Green Mountain projects first quarter 2012 adjusted
earnings per share in the range of 35 cents to 40 cents and the
ensuing fiscal 2012 adjusted earnings within $2.55–$2.65 per share.
The Zacks Consensus Estimate is pegged at 36 cents for the fourth
quarter and $2.63 for fiscal 2012.
Consolidated Revenues and
Margins
Green Mountain’s quarterly net
sales surged 91% to $711.9 million compared with $373.1 million in
the prior-year period, reflecting robust sales growth in total
K-Cup portion pack, Keurig brewer and accessory sales.
Almost 83% of the net sales were
contributed by the Keurig brewing system and its recurring portion
pack sales, including Keurig-related accessory. Rest of the sales
came from bagged coffee and office coffee services business.
Green Mountain forecasts net sales
growth of 85%-90% in the first quarter 2012. Additionally,
the company also plans to achieve consolidated net sales
growth of 60%-65% for fiscal 2012.
On a year-on-year basis, quarterly
operating income climbed 128% to $119.1 million, while the full
year operating income surged 148% to $428.7 million. Gross margin
expanded 400 basis points in the quarter, spurred by price
increases on K-Cup portion packs during fiscal 2011.
Other Financial
Updates
The company exited the year with
cash and cash equivalents of $12.98 million as on September 24,
2011, up from $4.4 million on September 25, 2010.
Inventories increased to $672.2
million from $262.5 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
80% due to continuous sales growth and the addition of Van Houtte
related accounts receivables, an increase in the long-term revolver
increased the debt outstanding to $582.9 million as on September
24, 2011 from $354.5 million as on September 25, 2010.
Our Take
While Green Mountain’s sound
position in a prospering industry and its strategic acquisitions
look promising, coffee’s vulnerability to highly volatile global
prices and presence of tough competitors like Peet's Coffee &
Tea Inc. (PEET) and Starbucks Corporation (SBUX) concern us.
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
Zacks Investment Research
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