In Mature Markets, Innovation Is Key For Keurig Green Mountain
- GMCR revenue growth outlook expected to improve from 2014 low of 8%, but by how much?
- Recent data suggests a slowdown in growth, driven by negative pricing, but Q1-15 earnings will shed some light.
- Household penetration rate of 25% by 2020, a realistic assumption.
- On mid-teen revenue growth outlook, stock looks undervalued.
Current Concerns Surrounding Keurig Green Mountain
- Net Price realization for brewers contracting.
- General Sales deceleration proves outsized from Nielsen.
- Luigi Lavazza liquidating sizable shareholder interest.
- Technical analysis showing support around $127.
Keurig Green Mountain And Dr. Pepper Snapple Group Extend Their Partnership As K-Cup Sales Decelerate
- Keurig/Dr. Pepper partnership comes as no surprise.
- McCafe licensed K-cups go on-sale at Walgreens locations.
- K-cup sales growth decelerates significantly as reported by Nielsen.
A Glimpse Into Keurig Green Mountain's Fiscal 2015 Operations
- Newly licensed K-cup partners offer Keurig tailwinds in 2015.
- International expansion as well as the dedication to the away-from-home business are slow growth areas of the Keurig business.
- Keurig will launch the Keurig Cold platform in late 2015. GMCR valuation assumes earnings contributions in the 12-month period post product launch.
Keurig Green Mountain's Litigation Situation Is Heating Up In The Consumer Space
- Keurig is embattled in litigation once again.
- Rogers Family Co. is taking the battle to Keurig with reviews and posts on their website and Amazon.
- Lawsuits pending against GMCR will likely be long and drawn out.
What Was Keurig Green Mountain Thinking When It Acquired Bevyz Global?
- Bevyz Global failed in all aspects of selling a product.
- Company officials had better luck selling their technology than finished product.
- Keurig Green Mountain's Keurig Cold investment will likely top $1bn.
Why Keurig Green Mountain's Impressive Run Could Be Over
- Keurig Green Mountain shares have gained more than 100% over the past year, but fell 7% last Thursday when the company announced the resignation of its CFO and disappointing guidance.
- The company has a flawless balance sheet and generates an impressive return on its assets.
- However, its shares trade at 33 times projected forward earnings while its future growth rate is expected to decline to below 20% per year.
- Based on these assumptions, Keurig Green Mountain's shares are likely overvalued by approximately 20%, and current shareholders should consider realizing capital gains on at least a portion of their positions.
Keurig Green Mountain: From Adversity To Crossroads
- GMCR shares are top S&P 500 performer in 2014, but lagging fundamentals elevate downside risk.
- Combination of remedial actions, creative legal strategies and cooperation may have been factors to outcome of lengthy SEC inquiry.
- Greenlight Capital closed remaining GMCR short position in Q3, concedes to bulls, but stands firm on thesis of past accounting and financial reporting issues.
- In addition to execution risk going forward, GMCR faces potential impairment risk(s) related to previous acquisitions.
- Consumer backlash over Keurig 2.0 is a potential threat to GMCR market dominance.
The Coca-Cola Wild Card Keeps Keurig Green Mountain In Play For Us
- GMCR reported earnings that beat on both lines and showed improvement in gross margin.
- The stock sold off on Thursday due to guidance concerns.
- We are long GMCR despite this.
- Earnings surprises to the upside could be a thing of the past.
- Coffee prices are higher and could continue to increase.
- New products introduced by Keurig Green Mountain are more proprietary than previous versions.
Update: Keurig Green Mountain Beats FQ4 Earnings - Valuation And Guidance Could Spell Trouble
- Keurig beat estimates for revenue and earnings for FQ4.
- My sentiment for the stock has gone negative due to a high valuation that doesn’t support guidance for 2015.
- I previously predicted that the stock would double in five years, but I didn’t expect it to double within one year.
Should You Buy Keurig Green Mountain Following Its Q4 Earnings Beat?
- Q4 2014 earnings were released after the market closed on November 19.
- Earnings per share and revenue results surpassed expectations.
- The company repurchased $55 million worth of its common stock during the quarter.
- The stock has reacted by falling a little over 1%.
Keurig Green Mountain: Sorry Bulls, No More Sane Buyers Left
- Business trades at a large, unwarranted, premium to peers.
- Despite strong growth model, DFCF evaluation projects perfection pricing at current levels.
- Technicals are bullish, but expect a reversal; potential catalyst being the earnings report.
- Company set to report earnings Wednesday afternoon.
- EPS beat possible due to reduced estimates.
- Guidance will be key for Keurig 2.0 and rising coffee prices.
- Balance sheet and capital returns will be examined closely.
Fri, Jan. 23, 12:41 PM
- Companies selling coffee perked up their ears after Starbucks said it saw strong single-serve and packaged coffee sales during its most recent quarter and took market share.
- Grocery store analysts have noted the aggressive positioning of Starbucks products in many chains over the last six months.
- SBUX FQ1 report, SBUX earnings call.
- On watch: Keurig Green Mountain (NASDAQ:GMCR), Dunkin' Brands (NASDAQ:DNKN), Kraft Foods (NASDAQ:KRFT), J.M. Smucker (NYSE:SJM), TreeHouse Foods (NYSE:THS).
Thu, Jan. 22, 10:18 AM
Wed, Jan. 21, 8:35 AM| 1 Comment
Wed, Jan. 7, 11:36 AM
- Shares of Keurig Green Mountain (GMCR +4.7%) are higher after the company adds Dr Pepper to the lineup for Keurig Cold.
- The development is viewed by beverage industry analysts as a negative for SodaStream (SODA -0.1%), although Whitney Tilson might not agree.
- Tilson famously called Keurig Cold "vaporware" in his bull thesis on SODA.
- The Israeli company for its part seems to be looking beyond soda based on an investor presentation last November.
- Previously: Marketing at SodaStream to be all about water.
Wed, Jan. 7, 2:06 AM
- Keurig Green Mountain (NASDAQ:GMCR) has signed a deal with Dr Pepper Snapple (NYSE:DPS) to sell capsules that make its sodas in its planned cold-drink machine.
- The agreement gives Keurig Cold a serious edge over SodaStream (NASDAQ:SODA), as it now has two of the top three soda companies (the other one is Coca-Cola (NYSE:KO)) as partners for its new platform.
- Keurig expects to bring the new device to market in September.
- Previously: Green Mountain +38.3% AH in response to Coca-Cola deal (Feb. 05 2014)
Thu, Jan. 1, 2:19 AM
- Dow: INTC +41%; UNH +35%; HD +28%; CSCO +25%; MSFT +25%.
- S&P 500: LUV +125%; EA +106%; EW +95%; AGN +92%; AVGO +91%.
- Nasdaq: AAL +112%; EA +106%; AVGO +91%; GMCR +78%; ILMN +68%.
Dec. 23, 2014, 8:06 AM
- Shares of Keurig Green Mountain (NASDAQ:GMCR) slide in early action following the recall of 6.6M coffee makers by the company.
- Previously: Keurig MINI Plus Brewing System recalled by company
- GMCR -3.1% to $135.50.
Dec. 23, 2014, 7:10 AM| 1 Comment
Dec. 15, 2014, 3:22 AM
- Keurig Green Mountain (NASDAQ:GMCR) is moving most of its U.S. coffee buying operations to Switzerland, after forming a new corporate entity called Keurig Trading GmbH there this past fall.
- "The core of our green bean coffee procurement for our global manufacturing operations will take place in Switzerland," said a Keurig spokeswoman, although she declined to comment on whether low taxes were a factor in the decision.
Dec. 10, 2014, 5:43 PM
- Citing "sustained increases in costs," J.M. Smucker (NYSE:SJM) is "increasing the list price on its K-Cup packs sold in the United States under the Folgers, Folgers Gourmet Selections, Cafe Bustelo, and Millstone brand names" by an average of 8%. The hikes go into effect on Jan. 5.
- SJM, along with Starbucks, is one of Keurig Green Mountain's (NASDAQ:GMCR) biggest K-Cup licensees. In May, Keurig and SJM expanded their partnership to cover new Keurig brewers.
Dec. 10, 2014, 1:49 PM| Comment!
Dec. 4, 2014, 4:14 PM
- Keurig Green Mountain (NASDAQ:GMCR) is buying the 85% of Bevyz it doesn't already own for €178M ($220M). The deal will be funded with cash on hand, and is expected to close in the next month.
- Bevyz, which has operations in The Netherlands and Malta, sells a single-portion drink machine (The Fresh) that can be used to make teas, coffees, juices, and sparkling beverages, along with related capsules. Keurig declares Bevyz provides it with "unique and complementary technology and research and development capabilities."
- Nonetheless, Keurig still plans to launch its Keurig Cold system (being developed with Coca-Cola) in the fall of 2015. The company is reiterating its FQ1 and FY15 (ends Sep. '15) guidance.
Nov. 20, 2014, 2:26 PM
- Keurig Green Mountain (GMCR -8.2%) declines after the company sets its guidance lower and announces the resignation of CFO Frances Rathke.
- During the firm's conference call, execs noted that Increased competition in the single-serve market continues to impact margins in the coffee sector.
- What to watch: Analysts say the wildcard with Keurig is if share price slides further would Coca-Cola (KO +0.1%) be tempted to buy out the whole company. Opinion is divided.
- GMCR earnings call transcript
Nov. 19, 2014, 4:58 PM
- Keurig Green Mountain (NASDAQ:GMCR) reports revenue from portion packs grew 22% to $949M in Q3.
- Sales of brewers and accessories fell 5% to $182M during the period.
- The company's gross margin rate increased 160 bps to 37.6%, aided by a shift in mix and lower green coffee costs.
- Guidance: Sales growth at a high-single to low-double digit rate is expected for 2015.
- GMCR -1.6% AH.
Nov. 19, 2014, 4:02 PM| 2 Comments
Nov. 18, 2014, 5:35 PM
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