Is Green Mountain a Bargain Here?

With shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) trading at around $45.30, is GMCR an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The most amazing stat for Green Mountain is a 37 percent short position on the stock. This kind of short position is usually found when a company has poor margins, a lack of growth, poor debt management, poor management in general, consistent losses, and it’s in a weak industry. If you’re familiar with Green Mountain, then you know that this company doesn’t fit the description whatsoever. However, shorts have been happy over the past couple of days. Will it last?

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Q1 EPS came in at $0.70, which beat the $0.65 consensus. Q1 revenue came in at $1.34 billion compared to $1.16 billion for the same quarter one year ago. The problem wasn’t with results, but with guidance. Green Mountain expects Q2 EPS between $0.70 and $0.75. This was actually in-line with the consensus of $0.71. However, the sales forecast for the current quarter was 14 percent to 18 percent, which was lower than Wall Street’s expectations of 20 percent. FY2013 EPS guidance was originally $2.64 to $2.74. It’s now $2.72 to $2.82.

Let’s take a look at some important numbers prior to forming an opinion on this stock…