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 (GMCR.DL) were percolating this morning, jumping as much as 26% after a surprisingly strong earnings report.
So what: The Keurig-maker has had a rough year, seeing its stock price tumble amid worries about patent expirations, accounting tricks, and the ouster of the departure of its chairman and CEO, so last night's report had shareholders breathing a sigh of relief. The company reported adjusted earnings per share of $0.64, well above expectations of $0.48. Revenue growth was also robust, increasing by 33% to $946.7 million, and showed strong increases in both major categories with a 47% in the single-serve K-cup packs.
Now what: The results seemed to stem concerns that Green Mountain would collapse once its K-cups came off patent. Sales did slow in the other products and royalties category, but the company blamed that in part on last year's sale of its Filterfresh delivery and office supply service. The coming quarters will reveal more details about the effects of the patent expiration, but it looks like shareholders are safe for now. With a P/E of 16 and moderate growth prospects, 2013 is shaping up to be a much more boring year for Green Mountain than 2012. That's a welcome development for shareholders.
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