Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is set to report FQ1 2014 after the market closes on Wednesday, February 5th. Green Mountain Coffee Roasters are most well known for their instant single cup coffee system subsidiary, Keurig, for which they make single cup pods called K-Cups. The company lost its patent for K-Cups in 2012 and since has been facing increased competition from unlicensed producers of K-Cups who can produce them more cheaply. In January, GMCR announced its Keurig 2.0 system which can produce full pots of coffee and is incompatible with unlicensed K-Cups. The Keurig 2.0 system won't be available until the Fall, however even still analysts are expecting growth from Green Mountain Coffee Roasters this quarter. Here's what investors are expecting from GMCR on Wednesday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Green Mountain Coffee to report 91c EPS and $1.407B revenue while the current Estimize.com consensus from 21 Buy Side and Independent contributing analysts is 93c EPS and $1.414B revenue. This quarter the buy-side, as represented by the Estimize.com community, is expecting Green Mountain Coffee to beat the Street's expectations on both profit and revenue.
Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in predicting Green Mountain Coffee's profit every time and 3 times in forecasting revenue. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller differential compared to previous quarters.
The distribution of estimates published by analysts on the Estimize.com platform range from 88c to 96c EPS and $1.369B to $1.480B in revenues. This quarter we're seeing a smaller distribution of estimates compared to previous quarters.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A smaller distribution of estimates signaling more agreement in the market, which could mean less volatility post earnings.
Throughout the quarter the EPS consensus from Wall Street fell from 98c to 91c while the Estimize.com forecast dipped from 94c to 93c. Over the same period of time, Wall Street has reduced its revenue expectation from $1.442B to $1.407B while the Estimize community raised its consensus from $1.407B to $1.414B. Timeliness is correlated with accuracy and increasing analyst revisions at the end of a quarter are often a bullish indicator.
The analyst with the highest estimate confidence rating this quarter is anmikyoso who projects 96c EPS and $1.400B in revenue. In the Winter 2014 season, anmikyoso is rated as the 30th best analyst and is ranked 29th overall among over 3,775 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, anmikyoso is expecting Green Mountain Coffee to beat the Street on profit but come up short on revenue.
While future growth contingent on the Keurig 2.0 system looks promising, Wall Street expectations for this quarter look great without it. Analysts are expecting a 21% increase in year over profit and a 5% increase in yoy revenue. Although Wall Street expectations are rosy to begin with, contributors on the Estimize.com platform are looking for GMCR to report even better earnings on Wednesday.
Disclosure: No positions