Gmcr

The evolution of Keurig Green Mountain (NASDAQ:GMCR) from a coffeehouse to the giant of the single-serve brewing industry has been an impressive growth story, giving long-term investors huge returns for their patience. Yet as the stock price has soared, Keurig Green Mountain has had to work harder to keep up its momentum. As Wednesday afternoon's release of the company's fiscal fourth-quarter results showed, Keurig has gotten to the point at which even beating expectations isn't always enough to guarantee a pop for the stock. Let's take a closer look at how Keurig Green Mountain did this quarter and for the full year, with an eye toward what's next for the company going forward.

Keurig brews up a strong quarter

Keurig's fourth-quarter results looked strong on their face. Revenue climbed 14% to almost $1.2 billion, outpacing the 11% growth rate that most investors had expected to see. Net income also came in better than expected, rising 11% and leading to adjusted earnings per share of $0.90, which unexpectedly topped last year's results despite some dilution in Keurig's share count.

But beneath the surface, some of the crosswinds within Keurig's report raised some concerns. On the positive side, sales of K-Cup portion packs soared 22%, and given that those sales make up almost 80% of Keurig's total revenue, the company's results on that front were impressive. Yet sales of brewers and accessories fell 5% from the previous year's fiscal fourth quarter, and sales from royalty income and other products fell an even more precipitous 17%. Keurig blamed the decline in brewer and accessory sales largely on a provision related to its Mini Plus brewer line, without which sales would have climbed 7%. The company sold 2.4 million Keurig brewers during the quarter.

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Source: Keurig.

Keurig also highlighted a number of factors that affected its overall margins. More sales of portion packs helped improve margins, as did favorable costs. But changes in the mix of different types of brewers sold, as well as rising costs for packaging materials and weaker pricing power, held back gross-margin growth to some extent.

For the full fiscal year, Keurig's growth was solid, with 8% higher revenue generating a 21% rise in adjusted net income and a 16% gain in adjusted earnings per share. Again, portion packs led the gains, while brewer sales and other products saw declines.

What Keurig investors can look forward to

Keurig Green Mountain's guidance for fiscal 2015 also left some investors wanting more. The company expects net sales growth to climb by percentages in the high single digits to low double digits, which is somewhat lower than the 16% growth that investors were looking for prior to the release. Mid-single-digit to high-single-digit percentage growth in earnings per share was more in line with the views of stock analysts, but even that wasn't enough to give investors as much reassurance as they wanted. Moreover, specific fiscal first-quarter earnings guidance of $0.83 to $0.88 per share was well below the $0.96-per-share consensus among those following the stock.

Still, Keurig Green Mountain remains confident its growth trajectory will be strong enough to allow shareholders to share in the resulting cash flow. Keurig chose to increase its quarterly payout by 15% to $0.2875 per share.

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Keurig Cold system. Source: Keurig.

One interesting aspect of the report is that the investments from Coca-Cola (NYSE:KO) and other partners has had a measurable dilutive impact on earnings per share. For fiscal 2015, the transactions with Coca-Cola and Lavazza will cut $0.27 per share from earnings, with $0.06 of that coming during the fiscal first quarter. As positive as the move was at the time, investors need to remember that Coca-Cola is sitting on impressive paper gains on its position and that in hindsight, the sale of Keurig stock might seem ill-advised if share prices keep climbing.

From a strategic standpoint, though, Keurig has plenty of things to look forward to. As CEO Brian Kelley noted, "We remain focused on what we believe is a significant opportunity to grow and premium-ize home beverages in both our hot and cold platforms." Given the long-term success of the Keurig brewer, new products like the long-awaited Keurig Cold could deliver impressive gains -- although expectations are high enough to leave room for disappointment as well.

Following its report, Keurig Green Mountain saw its shares fall another 2%, indicating investors' disappointment with the growth stock's pace of gains. In the long run, though, Keurig only needs to execute on its current strategy and find new drivers for future growth in order to ensure that its long track record of success will continue in the years to come.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Keurig Green Mountain and has options on Coca-Cola. 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.