I Still Believe in Green Mountain Coffee Roasters

By Tim Beyers – Nov 26, 2012 at 7:02PM

NASDAQ: GMCR.DL

Keurig Green Mountain, Inc.

Returns on capital are still rising, and margins remain steady.

Shares of Green Mountain Coffee Roasters (GMCR.DL) are off 38% year to date and more than over the past year. Will the company disappoint again when it reports fiscal fourth-quarter results on Tuesday? Analysts are looking for 26.7% revenue growth and a penny more in earnings per share.

Whether the Q4 numbers measure up, it's worth noting that returns on capital are high as they've been in five years, while gross margin has recovered from recent lows. Sales of premium K-Cups through Starbucks (SBUX 1.09%) also appear to be fueling growth, even if the math says investors have lost faith. Find out more in the following video.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Fool owns shares of and has created a synthetic short position on Green Mountain Coffee Roasters. The Fool also owns shares of and has written puts on Starbucks. Motley Fool newsletter services have recommended buying shares of Starbucks and Green Mountain Coffee Roasters, creating a bull call spread position in Apple, writing covered calls on Starbucks, and creating a bear put spread position in Green Mountain Coffee Roasters. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.