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 (NASDAQ:GMCR) were roasting the market today, climbing as much as 29% after smashing earnings estimates in its quarterly report.
So what: The Keurig purveyor said net income jumped 42%, to $132.4 million, and adjusted earnings per share were up 60%, to $0.93, crushing analyst estimates of $0.73. Revenue increased 14%, to $1 billion, slightly below the analyst consensus at $1.02 billion. The K-cup vendor also bumped its full-year EPS projection from $2.72-$2.82, to $3.05-$3.15, but cut its revenue forecast, saying it now expects 11% to 14% growth. Sales of higher-margin single-serve coffee packs jumped 26% in the quarter, though sales of Keurig brewers fell, explaining the faster growth in earnings, but slowdown in revenue.
Now what: Long term, management reassured investors that it still expects revenue growth in the range of 15% to 20%. Analysts cheered the report, as Dougherty resumed coverage with a buy rating, and Lazard raised its price target. Green Mountain also extended its K-cup contract with Starbucks for five years. The earnings beat and Starbucks deal seemed to have proven that Green Mountain is not a flop as it appeared last fall after falling below $20 a share on K-cup patent expirations. At $76, though, I'm not sure how much higher shares can go on fundamentals alone. For more on Green Mountain, pick up a copy of our premium research report, which features an in-depth look at the company's opportunities and risks, and comes with a year's worth of free updates. To get started with this insightful package now, all you have to do is click right here.
Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters and Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.