4 Things to Watch When Green Mountain Reports

Investors used to love when Green Mountain Coffee Roasters (Nasdaq: GMCR  ) would step up every three months for its quarterly report.

Keurig bashers would be silenced after yet another blowout report. Guidance would be raised, and the share price would follow.

The past year hasn't been as kind. Growth has slowed. Forecasts have been off. Patent expirations have stung.

There's plenty at stake when Green Mountain steps up to report tomorrow after the market close. Let's go over a few things that investors should be looking for as we approach the release.

1. Green Mountain needs to live up to expectations
Analysts still see growth here.

The pros see the coffee giant posting a profit of $0.48 a share -- just ahead of the $0.47 a share it rang up a year earlier -- on a 27% spike in net sales. The projections jibe with Green Mountain's own guidance issued back in August, calling for an adjusted profit between $0.45 a share and $0.50 a share on 25% to 30% in year-over-year top-line growth.

However, investors have been burned by Green Mountain's guidance before.

Back in May, Green Mountain's outlook was for net sales to climb 20% to 25% during the company's fiscal third quarter. Revenue inched 21% higher. Yes, that's merely on the low end of the guidance, but this was a company that would issue conservative guidance that it would blast through with ease.

Forecasting the bottom line has been even trickier. Back in February, Green Mountain was targeting earnings of $2.55 a share to $2.65 a share for all of fiscal 2012. That's actually now the outlook for fiscal 2013, as the company sees no more than $2.26 a share for fiscal 2012. Net sales projections for 2012 have also come down sharply since earlier this year.

In short, Green Mountain needs to start meeting at least the midpoint of its own guidance.

2. Rivo and Keurig Vue need to be off to encouraging starts
Starbucks (Nasdaq: SBUX  ) -- the java heavy with exclusivity as Green Mountain's lone "super-premium" K-Cup producer -- turned heads this year with plans for its own single-cup brewer.

Well, Verismo is now on the market. It's an espresso-centric maker. Green Mountain's flagship Keurig makes traditional premium brews using low water pressure. However, Green Mountain has two fresh bets on making a dent in the higher end of the market.

Green Mountain teamed up with investor and Italian coffee icon Lavazza to introduce Keurig Rivo earlier this month. It takes Starbucks head on, and some may argue that it even surpasses Verismo. Instead of the shelf-steady milk pods used by Verismo to froth milk, Verismo uses actual milk, giving the drinker the option to go with whole or skim milk, soymilk, or any dairy beverage to turn espresso into cappuccino or latte drinks.

Don't expect big sales out of Rivo right away. It is being sold exclusively in select Bloomingdales stores. There also just four varieties of Rivo pods, and a lack of variety is one of the knocks on Verismo.

However, Green Mountain now has a couple of quarters of Keurig Vue -- a higher end of its flagship model -- on the market. It uses its own proprietary (and patent-protected) pod system, so investors would love to hear that Vue systems are selling well.

There may not be a lot of color on either platform in tomorrow's call, but you can be sure that analysts will ask for it if Green Mountain doesn't offer it up on its own.

3. Everyone wants a peek into incoming CEO Brian Kelley's playbook
Green Mountain impressed the market by tapping Coca-Cola (NYSE: KO  ) executive Brian Kelley as its new CEO last week.

He was going to be the head of Coca-Cola's North American refreshment business before being swept away by Green Mountain as its new helmsman.

Now, Kelley doesn't officially start at Green Mountain until next week. There's little reason for him to be in attendance tomorrow. He's not accountable for the company's past, and he may not have a concrete vision for where he wants to take the company at this juncture.

However, the notable hire will inevitably lead to questions about his plan for Green Mountain. Any visibility on the Kelley hiring process would be a welcome bonus.

4. Green Mountain needs to justify its recent gains
There aren't too many Green Mountain shareholders that would consider themselves lucky these days, but the stock has rallied since bottoming out in the high teens this summer.

The bounce has been pretty impressive. Green Mountain shares have soared 64% since its July low.

Now Green Mountain needs to earn the spike.

Sure, it's still one of the cheaper stocks in the java space. Green Mountain is trading for 13 times trailing earnings and just 11 times its guidance for new fiscal year. Starbucks, on the other hand, is fetching a hefty 24 times this year's projected profitability and 20 times next year's target.

Growth is slowing. Back in August, the company was targeting 15% to 20% net sales growth in fiscal 2013, and it remains to be seen -- on this side of the patent expiration -- if its visibility still allows for that kind of absolute optimism.

If Green Mountain can stand by that guidance, for a change, it would be encouraging. Beverage giants Coca-Cola and PepsiCo (NYSE: PEP  ) trade at loftier multiples, even though analysts see the two pop stars growing their revenue by 3% to 5% in the year ahead.

Despite the hearty rally since July, Green Mountain can still be cheap if it says all the right things -- or at least avoids saying too many of the wrong things -- tomorrow afternoon.

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