By The Cup Or By The Carafe: Keurig Green Mountain SurgesCapitalCube • Yesterday, 1:06 PM
A Few Reasons Why Keurig Green Mountain Will Continue Outperforming
- Keurig Green Mountain reported mixed results last time, but investors should look at its long-term prospects.
- Keurig's partnerships with the likes of Coca-Cola and Kraft will help it penetrate more markets going forward.
- Keurig is also focusing on innovation and is on track to launch new brewing systems going forward.
- Keurig's valuation and earnings growth projections also seem impressive, indicating long-term growth.
How Would Keurig Green Mountain's Distribution Deals Impact The Stock?
- The deal between the two companies is to work together on manufacturing of the branded portion packs.
- Before striking a deal with Keurig Green Mountain, Kraft foods managed to collaborate with McDonald’s Corp.
- Looking at the trend of the past 12 months, the segment of single-cup coffee has experienced the fastest growth in the industry.
- Keurig 2.0 launches in North America with retailers and e-commerce.
- Consumer sentiment is mixed, but with broad concerns on closed system.
- Rivo now discounted to drive sales.
- Coming months will provide larger data set for investors.
- Green Mountain is risky after a recent rally.
- Recent beats follow guide downs in EPS.
- Lots of deals/partnerships announced, but revenue growth sluggish.
- Margin pressures are coming soon.
- Dilution remains an issue after share sales.
Keurig Green Mountain Market Response Today Vs. MM Forecasts
- Keurig Green Mountain introduces version 2.0 of its consumer home-run, the single-serving home coffee server.
- Intra-day market price jumps +13% on trading volume 5 times the daily average, opening at $125 (from $117 close) building steadily to $133. No wild swings.
- Institutions and Mutual Funds (359) hold 94% of all shares, and 114% of the float.
- Yesterday’s Market-Maker [MM] price range forecast was $110 to $131, and has been on our top Ten list of buys daily for the past two weeks. All sell targets now reached.
- Current MM price range forecast continues to see twice as much upside as downside, from the newly-attained higher level. Sell target $150.
The Keurig 2.0 Comes With A Bevy Of Risks For Keurig Green Mountain
- Keurig 2.0 carries with it several risks to the company.
- Cost increase to consumer and gross margin impact malign the product launch.
- Has the company learned anything significant from the Vue product cycle.
Keurig Green Mountain Showed A Strong Q3 2014 And Emphasized A Strong Full Year Outlook
- Keurig topped EPS estimates again.
- Brewer pricing deteriorated by roughly 20 points in Q3 2014.
- Cost for green coffee rises.
- Keurig raises portion pack prices in November 2014.
- Keurig 2.0 will launch shortly at Bed Bath & Beyond.
Keurig Green Mountain Hopes Coffee Costs Don't Put Share Price To Sleep
- Keurig Green Mountain faces higher input costs in 2015 due to rising coffee prices.
- Keurig plans on raising prices to offset higher costs.
- Product demand may fall, even as the company rolls out a new version of its coffee-maker this fall.
- Green Mountain had an excellent quarter that maintained a strong pattern of sales growth over the last decade.
- Green Mountain is not cheap, and it is fast becoming a mature company.
- Green Mountain has a few wisps of clouds in its future but also has some rays of sunlight.
- In less-dynamic economic environments like we’ve seen for the past 12 years, the country’s top talent decides to stay with their company instead of starting their own higher risk ventures.
- That thinking leads us to prior leading stocks that have gone through the wringer, come back to some extent and are setting up again, like GMCR.
- Today, two new catalysts could re-energize GMCR: Bolt brewer and Keurig Cold.
- Green Mountain reported mixed quarterly results, and at this valuation, it would be wise to sell shares.
- Price cuts hurt revenue growth, and there is evidence brewer demand is slowing, which will challenge long term growth.
- Facing stiffer competition from the likes of Starbucks and questions over soda, GMCR is rich at 32x earnings.
- The whisper number is $0.89, one cent ahead of the analysts' estimate.
- Keurig has a 71% positive surprise history (having topped the whisper in 10 of the 14 earnings reports for which we have data).
- The overall average post earnings price move is 'positive' (beat the whisper number and see strength, miss and see strength) when the company reports earnings.
Here's Why Green Mountain Coffee's Success Depends On The Keurig 2.0
- Keurig Green Mountain is set report earnings for its third fiscal quarter after the market closes on Wednesday, August 5th.
- As the rate of earnings growth continues to gradually approach 0, pressure is mounting for the Keurig 2.0 to become the coffee pod monopoly establisher that Green Mountain needs it to be.
- All Keurig needs to do is sell the 2.0 and ensure that its new rights management technology can keep imitators out.
Is Keurig Green Mountain About To Be Acquired By Coca-Cola?
- Two separate call option activity alerts were issued on GMCR in June, with no apparent news released by the company.
- Coca-Cola significantly increased its stake much quicker than originally planned, and could be a sign of an eventual takeover bid of Green Mountain.
- A takeover bid for Keurig Green Mountain could be valued up to $180 to $200 a share at present, and could move higher as the company continues growth and expansion.
- Global sales of ready-to-drink products are estimated to reach $125 Billion by 2017, and further strengthen the continued growth prospects for a combined Coca-Cola and Keurig Green Mountain.
David Einhorn Overlooks Improvement At Keurig Green Mountain
- Keurig Green Mountain has a $20 billion market cap and pays a dividend of 0.8%.
- In the most recent six months, the company has a 2.6x dividend coverage ratio.
- The most current public information indicates Greenlight Capital is short the stock of GMCR. However, the balance sheet strength indicates that this may not be a prudent bet.
Keurig Green Mountain: A Page From Coca-Cola's Vertical Integration Playbook?
- Increased stake in Green Mountain reveals Coke’s shrewd deal making.
- 16% minority position hedges Coke against product/market risk.
- Incremental purchases might indicate “ambiguity” of the target’s valuation.
- Step acquisitions are integral to Coke’s mandate in recent years.
- Brian Kelley’s departure from Coke to become CEO at Keurig Green Mountain may not be a coincidence.
Green Mountain: Headlines Don't Tell The Whole Story
- Green Mountain beat on top and bottom line. Was quarter sandbagged?
- Guidance was okay but not great. New buyback announced, but might only offset dilution.
- When revenue growth accelerates, gross margins will be hit from rising coffee prices.
- Company cut capital expenditures again. Major short squeeze no longer in play.
- Valuation a bit lofty for this space. Short position warranted if rally continues.
Tue, Aug. 26, 3:57 PM
- Brazil coffee production could end up down 18% Y/Y when the harvest ends next month. A severe drought in the nation has destroyed a large swath of crops.
- The shortfall in the nation is included in a forecast from Citigroup that calls for a global coffee deficit which could last until 2016 and pressure prices.
- Related stocks: GMCR, SBUX, JVA, SJM, KRFT, DNKN
- Related ETFs: JO
Fri, Aug. 22, 12:45 PM
Fri, Aug. 22, 9:41 AM
- Keurig Green Mountain (GMCR +8.5%) and Kraft Foods Group (KRFT +0.3%) sign a new licensing deal which will see Kraft-branded packs sold for Keurig commercial and consumer coffee brewing systems in the U.S.
- Distribution will begin this fall.
- Financial terms of the arrangement weren't disclosed.
- What to watch: The deal is a bit of a coup for Keurig with Kraft selling unlicensed K-cup packets previously.
Fri, Aug. 22, 9:15 AM
Thu, Aug. 21, 12:22 PM
- Williams Capital Group weighs in on Keurig Green Mountain (GMCR +0.4%) in front of the launch of Keurig 2.0 and Keurig Cold.
- The investment firm sees operating margin expansion of 216 bps in FY14, down from a prior estimate. Revenue growth is forecast at 7.0% vs 7.5% prior.
- Despite the adjusted estimates, Williams notes headwinds from lower coffee costs and holiday brewer sales.
- Williams' takes its PT on GMCR to $131 from $125 on a blended 2014-2015 multiple of 32.
Thu, Aug. 14, 8:50 AM
- Though Keurig Green Mountain's (NASDAQ:GMCR) price hike for K-cup packs follows similar moves by J.M. Smucker and Kraft Foods, analysts think consumers might put up some resistance at the higher levels.
- The impact on margins is already being hotly debated.
- The company plans to launch the Keurig 2.0 hot system this fall which will test the market for multiple-serving coffee machines.
- The initiative to launch a Keurig cold system in partnership with Coca-Cola is on track for a FY15 launch. Will it be in retail stores before the holiday shopping season?
Thu, Aug. 14, 7:52 AM| 1 Comment
Wed, Aug. 6, 4:13 PM
- Keurig Green Mountain (NASDAQ:GMCR) reports portion pack sale rose 10% to $826M in FQ3 to help offset a 4% decline in brewer and accessory sales.
- Product pack volume added 15 percentage points of sales growth, while product mix and pricing had a negative impact.
- Gross margin rate +140 bps to 43.5% due to favorable green coffee costs and gains in logistics productivity.
- Inventory -5.5% Y/Y to $639M.
- The company sees FQ4 EPS of $0.68-$0.75 vs. $0.86 consensus.
- GMCR -3.1% AH
Wed, Aug. 6, 4:02 PM| 3 Comments
Tue, Aug. 5, 5:35 PM
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Thu, Jul. 31, 9:15 AM
- SodaStream (NASDAQ:SODA) is upgraded by Barclays to an Equal Weight rating from Underweight.
- The company's Q2 results topped expectations yesterday and execs were full of confidence over a potential competing product from Coca-Cola and Keurig Green Mountain (NASDAQ:GMCR) which they seem to hint won't meet consumer expectations.
- CEO Daniel Birnbaum:"So here there is a philosophical departure between us and say Coca-Cola or Green Mountain and we have to play this out. First of all, I’d love to see their product and I don’t know why it’s been delayed, but we want to see the product, we want to see that it works, because we can also tell stories."
- SODA earnings call transcript
- SODA flat in premarket trading.
Wed, Jul. 9, 7:28 AM| Comment!
Tue, Jul. 1, 7:31 AM
Fri, Jun. 27, 7:38 AM| 1 Comment
Thu, Jun. 26, 3:56 PM
- Dougherty (apparently citing IRI) reports Keurig (GMCR -2%) saw 11.5% Y/Y K-Cup unit growth over the 4 weeks ending June 15. That's an improvement from the 8.9% reported in the prior 4-week period, but still slower than the 15.4% growth seen in the period before that one.
- Expectations are high following a 59% YTD rally fueled by strong earnings reports reports and the Coca-Cola deal.
- Keurig's portion pack sales rose 13% Y/Y in the March quarter to $898.2M, thanks largely to a 15% increase in sales volume.
Thu, Jun. 19, 10:15 AM| 1 Comment
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