What to Expect From Keurig Green Mountain Today

At the end of trading today, Keurig Green Mountain (NASDAQ: GMCR  ) will announce its second-quarter results. The stock has spent the last two years getting back to its 2011 position, after falling hard on comments from investor David Einhorn. Now things are looking up and the market expects another strong quarter from Keurig.

New agreements with Coke and Krispy Kreme have expanded Keurig's range since it last talked to the market. The Coke deal puts Keurig Green Mountain in more direct competition with suffering SodaStream and the Krispy Kreme tie-in helps expand the business's already impressive lineup. Those benefits are all yet to come, though, and the second-quarter results will have to rely on what's already in place.

What Keurig Green Mountain has forecast
In its first-quarter release, Keurig called for a low- to mid-single-digit increase in sales and earnings per share of $0.93 to $0.98. The company expects headwinds from an increase in unlicensed coffee pod sales. Since Keurig's patent on its K-Cup design expired, the market has had a small flood of third-party products released. Those haven't had a huge impact on Keurig's sales, but they've slowly been putting pressure on overall sales.

If the company hits $0.93 per share, it would end up flat compared to 2013's second quarter. Flat earnings would be a disappointment.

What the market is looking for
The analysts' consensus estimate for Keurig's second quarter is $0.94 per share. Over the last year, Keurig has consistently beat analyst expectations, but there are a few other drags on sales this quarter. Retailers have had a rough quarter, with weather and general consumer weakness pulling sales down. Some of that may end up knocking Keurig Green Mountain's sales, damaging the bottom line as well.

Analysts expect a 4.3% increase in revenue for the quarter, which is roughly in line with Keurig's in-house estimate. Overall, analysts anticipate the company to have continued solid, if not rocket-powered, growth over the second quarter.

The bottom line
Keurig Green Mountain has a lot of potential down the line. Its portfolio of brands continues to grow, bringing in more and more big names. The Coke agreement could help the business make leaps and bounds further down the line, but there will be significant investment required. For this quarter, I wouldn't be surprised to see Keurig hit the higher end of its earnings estimate, showing some resilience to soft consumer sentiment.

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11/26/2014 3:59 PM
GMCR $142.05 Up +2.12 +1.52%
Keurig Green Mount… CAPS Rating: **

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