On Jul 9, 2013, Zacks Investment Research upgraded Green Mountain Coffee Roasters Inc. (GMCR - Analyst Report) to a Zacks Rank #1 (Strong Buy) as it has secured numerous strategic alliances with other beverage giants for its single-serve Keurig brewers and K-cups.
Why the Upgrade?
Since March 2013 Green Mountain is roping in more and more beverage giants into its Keurig distribution system to increase the popularity of this single serve brewer. In March 2013, it formed a strategic alliance with Unilever plc.(UL - Analyst Report) under which the Lipton iced teas will be available in the K-cups of GMCR’s Keurig business unit. Again, in May 2013, the coffee giant joined forces with The Coffee Bean & Tea Leaf to launch the Coffee Bean & Tea Leaf K-Cup for Keurig single-cup.
Green Mountain aims to popularize the single-cup brewing system in America and has therefore, entered into several strategic distribution agreements to rope in popular brands like Dunkin’ Brands Group Inc. (DNKN - Analyst Report), Starbucks Corporation (SBUX - Analyst Report).
Through these agreements, Green Mountain is aligning with the strongest beverage brands to support a range of consumer choices and taste profiles in Keurig Single-Cup Brewing system.
Estimates were mostly revised upwards following the strategic alliances of the company and its effort to gear up the Keurig brewer and K-cups. For fiscal 2013, the estimate moved up 1.0% to $3.16 over the last 60 days. The Zacks Consensus Estimate for fiscal 2014 increased 2.0% to $3.56 over the same period.
Green Mountain also gave an encouraging outlook for the third quarter of fiscal 2013, when it expects earnings per share in the range of 71 cents – 78 cents and sales growth in the range of 11% to 15%. The guidance reflects the company’s continuous efforts to increase brand investments and product innovations.
Moreover, GMCR delivered a stellar second-quarter fiscal 2013 earnings (announced on May 09, 2013) on the back of solid top line growth during the quarter. The results were ahead of both the year-over-year results as well as the Zacks Consensus Estimate.
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