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 Green Mountain Coffee Roasters
So what: The maker of the Keurig single-cup brewing system and K-Cups reported solid first-quarter results that easily surpassed analyst forecasts. Wall Street consensus estimates called for Green Mountain to earn $0.16, excluding one-time charges, on revenue of $545.5 million for the quarter. Green Mountain's actual figures were $0.18 excluding one-time charges on revenue of $575 million, highlighting a nearly 67% jump in revenue. The company also boosted revenue and EPS guidance for the second quarter and full year above current analyst estimates.
Now what: Investors seem to be getting a buzz out of the growth synergies Green Mountain is beginning to derive from its recent acquisitions. It appears that the company has put the accounting scandal that derailed its stock price last year in the rearview mirror. One concern I still have is whether today's move is based on the strength of this earnings report, or whether the 26.2% of investors who are currently short the stock are being forced to cover and thus artificially driving up the price of the stock. I also wonder what will happen to Green Mountain a year from now when it faces these tough quarterly comparisons without any new acquisitions. Will it still be able to grow this strongly or will long-term growth at rivals such as Peet's Coffee & Tea
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Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. Starbucks is a Motley Fool Stock Advisor pick, Green Mountain is a Rule Breakers recommendation, and Peet's is a Motley Fool Big Short short-sale selection.
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