Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, specialty coffee brewer Green Mountain Coffee Roasters
With that in mind, let's take a closer look at Green Mountain's business and see what CAPS investors are saying about the stock right now.
Green Mountain facts
|Headquarters (Founded)||Waterbury, Vt. (1981)|
|Market Cap||$9.08 billion|
|Trailing-12-Month Revenue||$1.59 billion|
CEO Lawrence Blanford (since 2007)
CFO Frances Rathke (since 2003)
|Return on Equity (Average Past 3 Years)||15.9%|
|Cash/Debt||$32.9 million / $1.09 billion|
Peet's Coffee & Tea
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
Earlier this month, useless33 wrote that the Green Mountain bear case all boiled down to price: "Single serve coffee is convenient ... paring with [Starbucks
In fact, Green Mountain currently sports a rather lofty forward P/E of 36.2. That represents a premium to listed competitors Kraft (12.5) and Peet's (25.7), as well as its new giant partner, Starbucks (20.4).
CAPS All-Star georcole offers an inside view of the underperform argument:
I work in one of the largest grocery store chains in the Northeast. [Green Mountain] recently decided that they are not going to make the little bags of coffee so that we can brew our coffee by the pot anymore. [Green Mountain] made that decision, not us. So now we are going to switch over to another brand of coffee. How many other grocery stores, gas station convenience stores, restaurants, etc. are now going to have to go elsewhere for their coffee? Not a very good move [Green Mountain].
I know that they just signed a deal with Starbucks, but that is not going to be worth the increase that [Green Mountain] has experienced since the deal was announced.
If you put the two previous points together you are left with the impression that [Green Mountain] is concerned about picking up some sales (Starbucks), but not too concerned about losing a lot of regular customers that stop at the store on the way to work everyday for their cup of coffee. Why would they willingly give up that regular morning commuter crowd? I am baffled.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Green Mountain is a Motley Fool Rule Breakers pick, and Motley Fool Options has recommended buying puts on it. Motley Fool Alpha has opened a short position on Green Mountain. Peet's is a Motley Fool Big Shortshort-sale selection. Starbucks is a choice of Stock Advisor, and the Fool owns shares of it. Try any of our Foolish newsletter services free for 30 days.
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