Marc Riddick, an analyst with The Williams Capital Group, stated Tuesday,
I do think it allows some long-only investors the opportunity to take a fresh look at the name. A strong quarter, a good move in this stock and a new CEO coming onboard is a fairly powerful combination.
Chief Executive Lawrence Blanford is retiring next month, to be replaced by Brian Kelley, an executive from Coca-Cola Co (NYSE:KO). This is a great step forward for Green Mountain as the company has had difficulty making contracts and expanding their infrastructure, something Kelley is experienced in from his position at the Coca-Cola Company.
Net income was $91.9 million, or 58 cents per share, in its fiscal fourth quarter ended on September 29, up from $75.4 million, or 47 cents per share, a year earlier. Excluding items, earnings were 64 cents per share. On that basis, analysts on average were expecting 48 cents, according to Thomson Reuters.
Further, net sales jumped 33 percent to $946.7 million, topping analysts' average estimate of $902.7 million. Lastly, Green Mountain raised its forecast for fiscal year 2013 to $2.64 to $2.74 per share, up from $2.55 to $2.65 per share previously. It expects annual net sales to grow 15 percent to 20 percent.
Recently, insiders have been picking up shares, a big change from last year's exchange of the stock from insiders' hands.
Total insider purchases and sales reported to the SEC
Last 3 months
Last 6 months
Last 12 months
The single sale was made by Robert Stiller, a director at the company, due to margin calls in his account. The significantly higher buys than sells is a great indication for the company going forward, as insiders know their company best.
Staying On Top
This past September, two of the several patents associated with K-Cup packs expired. Regardless, Larry Blanford, CEO and president stated in the past call, "I'm pleased to say that we've not seen any marketplace dynamics that have caused us to think differently about our outlook for single serve packs."
While additional unlicensed single serve packs are emerging at the company, both brand named and store brand private label management is confident that Green Mountain will continue to be the leader in single serve beverages for the K-Cup brewing platform for a few reasons:
- The company puts out 32 brands and more than 200 varieties at a range of price points and is growing.
- The company recently added Snapple premium iced teas and Costco's Kirkland brand coffee.
- Their intellectual property portfolio will continue to offer important protection against non-licensed single serve packs.
- Blanford stated that all partners, including Starbucks (NASDAQ:SBUX) and Dunkin Brands (NASDAQ:DNKN), are still committed to multi-year agreements.
The company continues to grow its earnings year-over-year, but recently, analysts have put a low growth profile on the company for fiscal year 2013. Regardless of these analysts, the company continues to express its motivation to expand and grow its revenue. The company continues to beat earnings estimates by a long shot, evinced by this past quarter, 64 cents versus the estimate of 48 cents.
This last quarter is a turnaround for the company's stock price, which dropped roughly 50% back in May with its lowered outlook. Green Mountain's continues to beat out its competition in its proven K-Cup and Keurig products. From both a fundamental and valuation perspective Green Mountain is positioned well. Being in an industry that is growing and stable, along with reporting both fourth quarter and fiscal year success, the company is positioned well to continue its bullish trend.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GMCR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.