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Green Mountain Likely to Beat

by Mark Vickery

February 05, 2013 | Comments : 0 Recommended this article: (0)

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We expect leading coffee maker Green Mountain Coffee Roasters, Inc. ( GMCR - Analyst Report ) to beat expectations when it reports first quarter fiscal 2013 results on Feb 6.

Why a Likely Positive Surprise?

Our proven model shows that Green Mountain is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Green Mountain’s Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method) stands at +6.15%. This represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #1 (Strong Buy): Green Mountain currently carries a Zacks Rank #1 (Strong Buy).Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of the stock’s Zacks Rank #1 (Strong Buy) and ESP of +6.15% makes us confident of an earnings beat on Feb 6.

What is Driving the Better Than Expected Earnings?

Green Mountain’s performance turned around in the fourth quarter of fiscal 2012 from past few weak quarterly results. In the fourth quarter, it delivered an impressive earnings surprise of 36.2%. In fact this company has beaten estimates in 3 out of 4 past quarters, posting a healthy average earnings surprise of 36.3%. Estimates are mostly seeing an upward trend ahead of the first quarter fiscal 2013 results.

In addition, the company is focusing on its products and has rolled out many new products. Besides, Green Mountain, which specializes in single cup brewing technology, has upgraded its Keurig brewing system to attract more customers.

Based on its progress, the company raised its earnings per share projection for fiscal 2013 to $2.64–$2.74 from $2.55–$2.65.

Other Stocks to Consider

Green Mountain is not the only firm looking up this earnings season. You can also consider these stocks that offer exposure to the attractive retail-wholesale sector:

Abercrombie & Fitch Co. ( ANF - Analyst Report ) , Earnings ESP of +5.18% and Zacks Rank #1 (Strong Buy)

Natural Grocers By Vitamin Cotta ( NGVC - Snapshot Report ) , Earnings ESP of +7.14% and Zacks Rank #2 (Buy)

Pricesmart Inc ( PSMT - Snapshot Report ) , Earnings ESP of +3.80% and Zacks Rank #3 (Hold)

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