Market Overview

Green Mountain Coffee Roasters Continues To Surge After Last Week's Bullish Earnings Report

Shares of Green Mountain Coffee Roasters (NASDAQ: GMCR) are surging again on Monday, rising around 5% to $69.29. On Wednesday of last week, the company released a very bullish earnings report which beat analysts' consensus estimates by a substantial margin. The stock rose around 22% in the wake of the report and has subsequently added to those gains. Green Mountain (GMCR) reported fiscal first quarter net income of $104.4 million, or $0.66 per share, compared to $2.4 million or $0.02 per share, in the year ago period.

On an adjusted basis, which excludes certain items and is comparable to analysts' consensus, the company reported earnings of $96 million or $0.60 per share, versus $26 million or $0.18 per share, in last year's first quarter. This easily beat Wall Street EPS estimates of $0.36.

On the revenue front, GMCR reported sales of $1.06 billion which compared to $574 million in last year's corresponding quarter. This also came in ahead of Street estimates which called for revenue of $1.06 billion.

Looking ahead to Q2, GMCR sees adjusted EPS in a range between $0.60 to $0.65 which is below analysts' estimates of $0.73. Revenues for the second quarter are expected to be up 45% to 50%. For the full year 2012, Green Mountain sees adjusted earnings between $2.55 to $2.65 per share versus analysts' consensus EPS estimates of $2.56. Revenues are expected to grow 60% to 65% on a year over year basis.

Overall, it was a very strong earnings report from the company, which had released very disappointing results for fiscal Q4 last November. While the second quarter earnings guidance was not very impressive, investors appear to be willing to look beyond that to the full-year outlook which is strong. It is also likely that GMCR's management is being conservative with their estimates for Q2 given the volatility in the stock price and seasonality factors.

Green Mountain has been one of the most volatile stocks on the Nasdaq over the last year, and this volatility has provided active investors a multitude of profitable opportunities over the last 52-weeks. At the current price of roughly $69, the stock is still trading well off of its 52-week high of $115.98, but has more than doubled from its 52-week low of $34.06.

Over the last year, GMCR shares are up better than 75%, although they have lost roughly 28% over the last six months. It is these sharp price movements that make GMCR a name that active investors and traders may want to keep an eye on. There are a number of factors that are driving the volatility in the stock which should continue to contribute to big moves in 2012.

The stock has traditionally commanded a very high P/E multiple because of its tremendous growth profile. As a result of its growth metrics and high P/E, GMCR's share price has been driven in large part by momentum investors who are looking to buy high and sell higher, but are quick to get out at the first sign of weakness.

The company's rapid growth and high P/E has also attracted the attention of skeptical short-sellers. Roughly 22% of GMCR's float is currently sold short, and the activity of these short-sellers along with the large number of momentum investors in the name have significantly contributed to the volatility in the shares. This volatility will likely continue, and should present some good opportunities in the stock for traders and active investors in 2012.

Posted-In: Earnings Long Ideas News Guidance Short Ideas Intraday Update Movers Trading Ideas Best of Benzinga

 

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