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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of specialty coffee company Green Mountain Coffee Roasters (Nasdaq: GMCR ) sank a staggering 48% on Thursday after its full-year guidance came in well below Wall Street expectations.
So what: Green Mountain's second-quarter profit jumped a solid 42%, but a highly disappointing full-year outlook is reigniting serious concerns over its growth prospects going forward. Expiring patents and looming high-end brewer competition from Starbucks (Nasdaq: SBUX ) have recently raised doubts about its ability to stay at the top, but today's warning suggests that its popularity is already waning much faster than expected.
Now what: Management now sees 2012 adjusted EPS of $2.40-$2.50 on sales of $3.8 billion-$4.0 billion, well below Wall Street's view of $2.65 and $4.27 billion, respectively. "As we continue to move forward on the adoption curve, we believe we may experience a more moderated growth trajectory for both Keurig brewer and K-Cup pack sales and our revised 2012 estimates reflect as much," said President and CEO Larry Blanford. "However, given the sheer volume of brewers sold, we continue to expect a significant growth in the installed brewer base." So while Green Mountain's fastest growth days might be behind it, Mr. Market might finally be offering its still-respectable future prospects at a discounted price.
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