Green Mountain Coffee Roasters

Green Mountain Coffee Roasters (GMCR - Analyst Report) recently hit a new all-time high of $33.98 on the explosive growth of its home-brewing packets and products. The company has either matched or beaten the Zacks Consensus Estimate in each of the last four quarters.

The recent up draft we have seen in shares of GMCR came on the heels of better than expected Q2 results from late July that included a 5.5% earnings surprise.

Third-Quarter Results

Revenue for the period was up 64% from last year to $312 million. Earnings also came in strong at 19 cents per share, 5.5% ahead of the Zacks Consensus Estimate.

The primary driver of the great quarter was the company's K-Cup products, which is basically an individual package of coffee that customers can brew at home, where sales were up 90% from last year to $197 million.

Green Mountain also gained on selling its Kuerig products and accessories that are actually used to brew the coffee, where sales were up 69% to $64 million.

Not only is Green Mountain scoring big on the revenue front, it is also focused on cutting costs, stretching its gross margin to 35.2% from 33.6% last year.

Acquisition Complete

The company also announced that it completed its acquisition of Diedrich Coffee, Inc. during the quarter at a total cost of $300 million.

Balance Sheet Under Pressure

With the Diedrich deal finally closed, the company's balance sheet has been stretched a bit, with cash and short-term investments down to $10 million from $144 million last year.

Estimates

With some solid upward momentum in tow and the company refining its current and next-year guidance, the next-year estimate jumped 17% to $1.17, a bullish 69% growth projection.

Valaution

Although this stock has plenty of upward momentum, it leaves something to be desired on the valuation front, with a forward P/E of 44X against its peers 13X.

2-Year Chart

GMCR has spent most of the last two years trending higher, recently hitting a new all-time at $33.98 before pulling back a bit of general market weakness. Look for support from the long-term trend line on any weakness.

Read the April 19 GMCR article here

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

Read the full analyst report on GMCR