Shares of SodaStream were trading slightly lower this morning after Green Mountain served up uninspiring financial guidance. The move doesn't make any sense, but let's first start by diving into the java heavy's report.
Green Mountain's stock opened nearly 9% lower after projecting net sales in the current quarter to climb by just 14% to 18%. Wall Street was holding out for a 20% advance. The outlook for the company behind the Keurig single-serve brewer remains steady for the entire fiscal year that ends in September. Green Mountain is still banking on 15% to 20% top-line growth in fiscal 2013. It's also boosting its adjusted earnings per share range to between $2.72 and $2.82 -- from between $2.64 and $2.74 -- but the market's more concerned about Green Mountain stumbling on the top line in the near term.
The brewing baron is going to be watched closely now that K-Cup patents expired in September and a new CEO was brought on in December.
Green Mountain's report was decent, but the shares had nearly tripled since bottoming out this past summer. Wall Street was going to find any excuse to give the rally a breather.
SodaStream opened higher, but turned lower within minutes of the trading day. An hour into the day the stock was shedding 3% of its value.
Yes, both companies offer up popular appliances that make beverages. So what? Green Mountain offers a limited line of "served over ice" drinks, but its specialty is warm beverages. SodaStream fizzes up water for drinks that are typically served cold. Consumer consumption patterns couldn't be more different.
The models also aren't as similar as one would think. Green Mountain's K-Cup patents just ran out, but it's not as if SodaStream ever had any patents on the flavors. Anyone can put out syrup. SodaStream certainly has patents on its carbonators, bottles, and actual soda makers, but are we going to lump every razor-and-blades model together? I don't see any razor makers taking a hit today on Green Mountain's news.
SodaStream will get a chance to have the final word when it reports its latest financials later this month. For better or worse, Green Mountain may also find itself inexplicably moving higher or lower on the news.
This has to end. Mr. Market needs to do a better job of vetting coattails and bandwagons.
With Green Mountain taking a hit today, many investors are wondering whether this is the end of the former market darling, or the perfect entry point for an enormous rebound. You can find our recommendation for how to play the company in our new premium research report. In it you'll find everything you need to know about Green Mountain, including whether it's a buy at today's prices. Click here for instant access.