Second-quarter net income was virtually flat at $2 million, or $0.25 per share. Green Mountain's stake in Keurig resulted in a non-cash loss of $0.04 per share, and the quarter also included $0.04 per share in expenses related to new accounting rules for stock-based compensation. (With these considerations excluded, the company said its profit increased by 23%, and the company did beat analysts' quarterly expectations.) On the other hand, Green Mountain's sales jumped 27% to $47 million. Gross profit margin increased to 36% from 35%, although operating margin decreased to 8.4% from 9.2%.
It may be tempting to compare Green Mountain to other coffee purveyors such as Starbucks
Speaking of its multichannel approach, Green Mountain has some very strong partners. It recently signed on Target
Speaking of its organic and Fair Trade coffee, Green Mountain noted a 60% increase in shipments in that segment, which benefited all of its sales channels (with McDonald's a major growth driver there). Green Mountain seeks to balance profits and social responsibility, which may make its products appealing to certain consumers. On the other hand, its Fair Trade coffee is also lower-margin than Green Mountain's other blends.
Though I do find the business interesting, I can't help being a little leery. Green Mountain lowered its guidance for this year by $0.05, although it did lift its financial guidance for 2007. Given Green Mountain's expectation of a slow year ahead -- and the heavy-duty competition it faces -- I'd say there's ample time for interested investors to watch and wait.
For related headlines, see the following Foolish articles:
- Green Mountain tops Business Ethics' list of best corporate citizens.
- Green Mountain also made a list of superior stocks.