| Stock (Symbol) | Stock Price | |
Green Mountain Coffee (GMCR) |
$26 |
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| Data is as of | Expected to Report | Sector |
May 9, 2012 |
July 27 |
Food & Necessities |
| Sharek’s Take | ||
 Green Mountain crapped the bed last quarter, missing sales estimates by around $50 million (sales of $885 million). Management doesn’t know how to gauge its own business right now, and the stock has dropped from $50 to $26 since last quarter’s earnings report. Luckily I first purchased GMCR at $9, and have both bought and sold shares along the way. There was a time I was selling so many shares I had to get myself to stop. Still, GMCR was over $100 last year and I let it fall to $26. I should have sold last quarter.What to do now? Food manufacturers are worth 15 times earnings when mature — that’s the P/E those stocks get. During past four years we’ve seen GMCR’s P/E in the 40s at times due to the rapid growth. Now with growth a question mark, I think GMCR will revert back to the mean and get a 15 P/E. That would be the stock going from $26 to $37 this year, and to $47 next year. That’s my guess. |
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| One-Year Chart | ||
 Wow, a P/E of 11. That’s all GMCR is selling for now. Here’s the issue — GMCR’s K-cup patent is going to expire soon, what will profits be the year after that happens? So there’s uncertainty. |
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| Earnings Table | ||
 Profit growth was a respectable 33% last quarter. Sales growth was 36% which sounds good, but look:2011 Q1 $575 mil 2012 Q1 $1,158mil +101% 2011 Q2 $648 mil 2012 Q2 $885 mil +36% Sales grew between Q1 & Q2 last year, sales fell between Q1 & Q2 this year. Not good. Management admitted it doesn’t have a feel for sales right now. Annual Profit Estimates took a hit, the company is still expected to make $2.50 of so this year, $3.00 next year (maybe). Quarterly estimates fell, still look decent. |
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| Fair Value | ||
 GMCR should at least be worth 15 times earnings. The stock looks undervalued. |
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| Ten-Year Chart | ||
 The ten-year chart shows GMCR made a parabolic move last year. But, profit growth was 134%. Still, the $40 to $115 move was took much. Now GMCR is below its long-term trendline. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
18 of 18 |
Looking at the ten-year chart, its clear GMCR was too high at $100. At $25 the stock is cheap. My guess is the stock should go up 50% or so to get to Fair Value. |
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Aggressive Growth Portfolio
N/A |
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