Working Capital Spooks Green Mountain Coffee Investors
Green Mountain Coffee Roasters (NASDAQ:GMCR) shares have been in a tailspin following its weak Q4 earnings numbers.
Earnings per share of $0.47 missed estimates by $0.01 and revenue of $711 million — though up 96% y-o-y — missed by $49.5 million. Of particular concern was working capital which appeared to have gone haywire. Inventories reported at $672.2 million were higher by $262.5 million over the previous year, and receivables were up 80% to $310.3 million from $172.2 million. The increase in inventories was due to raw materials of $136.5 million and finished goods of $273.3 million.
In October, top hedge fund manager David Einhorn shorted Green Mountain Coffee (NASDAQ:GMCR) while all but alleging accounting fraud. “The research shows that GMCR (and its distributor) are potentially engaged in a variety of shenanigans that appear to mislead auditors and to inflate financial results.”
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During the earnings conference call, the company said: “Our fourth quarter revenue was off our estimates. We believe this resulted from a number of factors, including changes in wholesale customer ordering patterns in our grocery and club channels. We saw strong increases in orders from certain customers and those channels during our fiscal third quarter followed by declines in their ordering patterns in our fiscal fourth quarter.”
They also addressed “recent allegations of misconduct”: “Our audit committee has reviewed the allegations and we are confident there is no misconduct. There is no wrongdoing. We understand that with success comes scrutiny and at times, skepticism. Ultimately, our best response is continuing to run our business with the utmost of integrity, focusing on driving a sustainable and successful business model.”
Accounting clouds aside, a positive for the company was the recent announcement by Starbucks (NASDAQ:SBUX) CEO Howard Schultz that Starbucks (NASDAQ:SBUX) expects to ship 50 million K-Cups — and K-Cup sales will drive future EPS growth because Green Mountain earns a royalty on every K-Cup shipment.
Here’s how top coffee stocks are trading:
- Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR): The shares recently traded at $42.15, down $24.87, or 37.11%. Its market capitalization is $6.45 billion. They have traded in a 52-week range of $29.55 to $115.98. Volume today was 22,665,286 shares versus a 3-month average volume of 5,696,680 shares. The company’s trailing P/E is 40.76, while trailing earnings are $1.03 per share. About the company: Green Mountain Coffee Roasters, Inc. roasts Arabica coffees and offers various coffee selections. The Company’s products include single-origin, estate, certified organic, Fair Trade, signature blends, and flavored coffees sold under the Green Mountain Coffee Roasters brand. Green Mountain serves offices, supermarkets, and convenience stores, and operates a direct mail business. Get the most recent company news and stock data here >>
- Starbucks Corp. (NASDAQ:SBUX): The shares recently traded at $42.95,. Its market capitalization is $31.99 billion. They have traded in a 52-week range of $29.45 to $44.70. Volume today was 1,669,468 shares versus a 3-month average volume of 8,405,060 shares. The company’s trailing P/E is 26.51, while trailing earnings are $1.62 per share. The company pays a dividend of $0.68 per share for a dividend yield of 1.50%. About the company: Starbucks Corporation retails, roasts, and provides its own brand of specialty coffee. The Company operates retail locations worldwide and sells whole bean coffees through its sales group, direct response business, supermarkets, and on the World Wide Web. Starbucks also produces and sells bottled coffee drinks and a line of ice creams. Get the most recent company news and stock data here >>
- Dunkin’ Brands Group Inc. (NASDAQ:DNKN): The shares recently traded at $26.39, down $0.05, or 0.19%. Its market capitalization is $3.17 billion. They have traded in a 52-week range of $24.97 to $31.94. Volume today was 107,974 shares versus a 3-month average volume of 680,002 shares. The company’s trailing P/E is 48.96, while trailing earnings are $0.54 per share. About the company: The owner of Dunkin’ Donuts Baskin-Robbins has more than 14,800 points of distribution in 44 countries, and approximately 120 years of combined history. Get the most recent company news and stock data here >>