Caffeine High: Green Mountain Results Impress
Green Mountain Coffee Roasters (NASDAQ:GMCR) shares are up more than 15 percent in afternoon trading on Thursday as the maker of Keurig-brand single cup coffees and brewers posted higher-than-expected profit for the third quarter after the closing bell on Wednesday.
Sales of Green Mountain’s K-Cups and single-cup brewers rose during the quarter, bringing in profit of 89 cents per share when analysts had expected the figure to be around 75 cents. Net income rose to $127 million from $91.9 million a year earlier. Revenue rose 11 percent to $1.05 billion, beating expectations of $964.6 million. Sales of K-Cups also rose 11 percent, and brewer and accessory sales increased 27 percent.
Green Mountain has been working to offer more varieties of its K-Cups, as the company has lost some of the patents on the coffee pods in the last year and grocery stores have begun introducing off-brand versions. In order to fight this, Green Mountain announced during its earnings call that it will be introducing a new Keurig brewer that cannot use unlicensed K-Cup pods, according to Reuters.
The new brewer will replace the older style throughout 2014 and early 2015. Green Mountain makes most of its money through selling its K-Cup pods, as the company sells the Keurig brewers almost at cost to encourage consumers to switch to the new brewing system.
The company’s forecasts didn’t impress investors so much. Green Mountain predicted that next quarter’s earnings will come in at 90 cents per share when analysts had expected 96 cents per share. Green Mountain cited the negative impact of unlicensed K-Cups and lower consumer spending as reasons it was cautious about the forecast, according to Bloomberg.
As coffee remains the go-to morning beverage for a majority of Americans and studies increasingly show that it’s full of health benefits, the drink seems like a pretty stable commodity for investors to bet on. The K-Cups and Keurig brewers make brewed single cups of coffee that come in a variety of flavors. Green Mountain’s results show that the company is succeeding at drawing consumers in with its unique way to make and drink coffee.
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