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 (UNKNOWN:GMCR.DL) 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.