Back to top

Analyst Blog

Specialty coffee retailer, Green Mountain Coffee Roasters Inc. (GMCR - Analyst Report), delivered robust 2013-second-quarter adjusted earnings (excluding amortization of identifiable intangibles and SEC-inquiry related expenses) of 93 cents per share that surpassed the year-ago quarter earnings of 64 cents by 45%. It also beat the Zacks Consensus Estimate of 73 cents by 27.4% on the back of solid top line growth and lower interest expense.

Consolidated Revenues and Margins

GreenMountain’s quarterly net sales rose 14% to $1.0 billion from $885.1 million in the comparable prior-year quarter, backed by a 16% sales growth of Keurig Single Cup Brewers, single serve packs (K-cups) and Keurig related accessories.

Gross profit increased 32.6% to $415.1 million. The reported gross margin went up 590 basis points to 41.3% due to favorable green coffee costs, lower wastage cost of finished goods and raw materials, lower labor and overhead manufacturing costs.

Net sales of Single Serve Packs increased 21.2% year over year to $794.0 million, fuelled by a substantial 26-percentage points surge in volume, partially offset by mix and pricing headwinds.

Net sales of  Brewers and Accessories slipped 10.1% from the comparable prior-year quarter to $126.8 million. Approximately 1.36 million brewers were sold during the period (9% lower shipments than the year-ago quarter), out of which, 1.23 million Keurig Single Cup Brewers were sold by Green Mountain and the rest by the company’s licensed brewer partners.

Net sales of Other products slipped 7% to $84.0 million due to demand shift from traditional coffee package formats to single serve packs.


Management believes that there are ample opportunities of expanding its Keurig system in the domestic market. The company has raised its adjusted earnings per share outlook and capital investment for fiscal 2013, but reiterated its net sales growth and free cash flow estimates. Green Mountain expects its adjusted earnings in the range of $3.05 to $3.15 per share, up from the prior guidance of $2.72 to $2.82 per share.

The company expects net sales growth in the range of 11%–14% over fiscal 2012 compared to 15%–20% as announced previously. Free cash flow is estimated to be in the range of $300 million–$400 million compared to $100 million–$150 million as expected previously. Capital expenditure is expected in the range of $275 million to $325 million, higher than the prior estimate of $350 million to $400 million.

GreenMountainalso provided its outlook for second-quarter 2013. For the second quarter, the company expects adjusted 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.

The Zacks Consensus Estimates for the second quarter and fiscal 2013 are pegged at 66 cents and $2.84 per share, respectively.

GreenMountaincurrently carries a Zacks Rank #1 (Strong Buy). If you are looking for a diversified retailer, it might not be a bad idea to check out The TJX Company (TJX - Analyst Report), Costco Corporation (COST - Analyst Report) and Gap Inc. (GPS - Analyst Report) all with a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.48 +6.16%
BITAUTO HOL… BITA 81.71 +5.12%
CHINA BIOLO… CBPO 48.00 +3.49%
CTPARTNERS… CTP 16.49 +3.19%
STRATTEC SE… STRT 73.90 +3.15%