Thursday, February 2, 2012

Short squeeze on GMCR's earnings

As I am writing, the shares price of Green Mountain Coffee (GMCR) soared by over 22%  to $65.81 following its earnings release yesterday.

The once enamored star had been brutally attacked, not the least, by a high profile bashing of the renowned hedge fund manager, David Einhorn in October, sending the shares plummet from over $100 to as low as $37.

Yesterday, the company's announcement of a 102% rise in sales and a stunning 526% increase in operating income seemed to have garnered some confidence. The call did sooth the nerves of investors who were worried about the growth potential of the Keurig system and K-cup pack sales.

The Keurig system and K-cup did not seem the least bit losing momentum. "Our brewer sales in the first quarter of fiscal year 2012 were above our expectations, with approximately 4.2 million brewers sold by the combination of GMCR and our licensed partners. That total is more than half of the 6.5 million brewers sold in all of our fiscal year 2011," said Blanford, the CEO of GMCR. Taking away the effect of the acquisition of Van Houtte that contributed 13% increase in K-Cup pack sales, the company managed to raise the price point of K-cup by as much as 21% (talk about pricing power) and brought in a whopping 81% rise in sales volume.

The inventory was cited by critics as an issue. According to the management, it was a deliberate effort to meet the increase in demand. In the quarter ended December 31, 2011, inventories were $606.7 million compared to $269.1 million at December 25, 2010. However, more than half of the increase was due to a 266% increase in raw materials, most notably from an increase in green coffee volume and a 44% average green coffee cost increase. Combined with the growth in sales, a $162.4 million increase in finished goods inventory was hardly a sign of slowing sales.

With a current market in the mode to chase "growth", GMCR, with "growth" written all over its head, is back to the game. This is not all without caveats though. The management guided a 60-65% growth in net sales for the fiscal year of 2012. Given a 102% growth in the first quarter, investors who was looking for super growth above the company's past 3 years (75% compound annual growth rate) could very well be disappointed.

Disclosure: I do not have any position of GMCR in our personal account.




11 comments:

Anonymous said...

For normal delivery the mother should be fit to cope with
the delivery. What you should do is to focus or target a particular group of muscle
for once or even twice a week. Emotion linked to a definite objective is a strong mixture.



Check out my blog post :: please click the next site
Also see my webpage - relevant web site

Anonymous said...

Hi, after reading this remarkable article i am as
well happy to share my experience here with friends.

My web page ... www.biotechnologyreview.net

Anonymous said...

Information that informs the public and makes them good citizens is the kind of quality
information that one can be proud to call news, and if it ever goes completely out of
style, may the Lord help us, for it will be the end of civilization as we know it.
I have more stuffings in me from yesterday than I care to
think about. Due to the recent horrifying terror attacks and other such
couple of events people want to be aware and alerted of the whereabouts of the nation.



Have a look at my weblog - Latest Daily News

Anonymous said...

People are very interested to watch the latest crime news.
Indeed, internet is the best source of because it is easily accessible
and fast. The facility of websites and online news
are also getting lot of appreciation because it is very time
saving and people can read it in between their work.

My weblog :: visit this backlink

Anonymous said...

It improves blood and oxygen flow to the muscles that are recovering from the prior hard workout.
We know because they have done so for millions of other people.
What I tell my clients is that they need to schedule their fitness time like it's a doctor's appointment.



Take a look at my weblog :: Highly recommended Internet site

Anonymous said...

Great website you have here but I was curious if you knew of
any message boards that cover the same topics talked about in
this article? I'd really like to be a part of online community where I can get advice from other experienced people that share the same interest. If you have any suggestions, please let me know. Many thanks!

Take a look at my blog - please click the next webpage

Anonymous said...

Early farmers often found that hybrid strains of animals
and plants often possessed more favourable characteristics.
They give hope to the sufferers of many incurable and unstoppable
diseases ravaging the population, such as cancer, AIDS, Alzheimer's disease, diabetes, multiple sclerosis and other grave conditions. "The Kenexa solution has enabled our people to remain focused on drug discovery and development" said Grossman.

my blog ... Biotechnology and Bioengineering

Anonymous said...

The news which is telecasting all the information from all
the sides of the world is called as world news. Indeed, internet is the best source of because it
is easily accessible and fast. These have become world famous with all the passing days.


My website latest world news

Anonymous said...

Based on my own experiences I am going to
make five recommendations that I wish someone had made to me to help take the fear out of fitness.
Blowing off some steam with a quick round of solo travel fitness in the morning can make your whole day brighter.
' Being physically active can promote good mental health and help you to manage stress, anxiety and depression.

Feel free to visit my web site - http://xurmaebooksban.xitti.com/link/37

Anonymous said...

Take a look at your schedule and come of with solutions ahead of time for lunches
and dinners out, this will give you a game plan to follow.
Naturally, if you are not a morning person,
setting your alarm for 5am to go run a few miles will probably fail.
I am aware this seems enjoy ridiculous advice - Get
real if you may possibly just flip a switch and enjoy exercise you
would certainly, right.

Take a look at my web blog: fitness tips and quotes

Anonymous said...

Most of you hunger to know more about the glitzy
life styles of glamorous celebrities and sensual models.
Women who are planning the wedding of their dreams can find plenty of
fantastic information in Bride’s magazine. The singer will not be charged for her public intoxication, but her boyfriend was charged a $30,000 bail fee
to release himself after he was tested positive for driving under
the influence.

my site prepper-foods.com