| Stock (Symbol) | Stock Price | |
Green Mountain Coffee (GMCR) |
$46 |
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| Data is as of | Expected to Report | Sector |
January 14, 2012 |
Jan 30 |
Food & Necessities |
| Sharek’s Take | ||
 David Einhorn slammed Green Mountain Coffee last quarter. His call hit at a perfect time and slammed GMCR shares. The negative report came out October 17, 2011 and helped push shares down from $92 to $83. Einhorn admitted to be short GMCR (this stock has been a short favorite among institutions for many, many years). In Einhorn’s presentation, he points out the following flaws in GMCR:
The end result is GMCR has dropped from $92 to $46 since Einhorn’s call. The revenue miss last quarter spooked investors. But the inventory issue may have been fixed. Last quarter, inventories were up 356% year over year. What I think happened is management took the inventory issue seriously and actually counted what it had. The inventory issues (like a shell-game of moving inventory as well as expired K-cups in the warehouses) were the one new thing in Einhorn’s presentation. If that’s fixed, then this stock could pop after earnings are reported on (or around) January 30th. |
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| One-Year Chart | ||
 The timing of Einhorn’s call was good: GMCR sported a 56 P/E two quarters ago and a 37 one last quarter. Food stocks generally don’t get P/Es over 25. Now GMCR’s P/E is a reasonable 18.Estimates look great for the next two quarters. Profit growth is expected to clock in at 57% this year. Stock’s basing around $45. |
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| Earnings Table | ||
 Sales were $712 million LastQtr., short of the $761 million estimate. Still, that’s a 91% climb from a year-ago. Profits jumped 114% LastQtr.GMCR only missed profit estimates by a penny. That’s it: a penny! Annual Profit Estimates declined a little, probably because of the revenue miss last quarter. Quarterly estimates continue to amaze. Starbucks K-cups hit the shelves in November and Dunkin’ Donuts K-cups were in Dunkin stores in August. Profits are expected to double this quarter. This could be the quarter GMCR gets its mojo back. |
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| Fair Value | ||
 If GMCR gets a P/E of 25 — and estimates stay consistent — GMCR will rise 40%. By 2013 the stock could get back to $100. This hypothetical might be too hypothetical. |
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| Ten-Year Chart | ||
 The ten-year chart shows a parabolic move higher last year. That gain was going to be hard to hang on to. Now the stock is back in its trendline.This quarter: Yearly profit growth 46% Yearly stock growth 39% Last quarter: Yearly profit growth 39% Yearly stock growth 46% |
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| Power Ranking | Bottom Line | |
Growth Portfolio
11 of 20 |
Green Mountain had an SEC inquiry into its accounting when the stock was in the $20s, and that didn’t stop it from blowing past $100. Although this issue has risk, the upside is plentiful if management has contained the warehousing accounting issues. GMCR could pop with a clean earnings report. |
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Aggressive Growth Portfolio
10 of 10 |
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