Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Let's turn to Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). The single-brew machine giant had a tumultuous 2012, as battles with short-sellers and volatile earnings results led to some big ups and downs for the stock. Let's take an early look at what's been happening with Green Mountain Coffee over the past quarter and what we're likely to see in its quarterly report Wednesday.
Stats on Green Mountain Coffee
|Analyst EPS Estimate||$0.65|
|Change From Year-Ago EPS||8.3%|
|Revenue Estimate||$1.33 billion|
|Change From Year-Ago Revenue||15%|
|Earnings Beats in Past 4 Quarters||3|
Can Green Mountain Coffee brew up a big win for shareholders? Analysts have gotten increasingly optimistic about Green Mountain's prospects over the past three months. They ramped up their earnings-per-share calls on the coffee stock by a nickel, and bigger jumps for fiscal 2013 and 2014 bode well for the company's future. The stock has definitely reflected that enthusiasm, vaulting almost 80% just since early November.
Much of those gains have come from the realization that competitive threats simply aren't as well developed as some had feared. For instance, Starbucks Corporation (NASDAQ:SBUX) had many Green Mountain investors worried about its Verismo machine, but with about 150,000 Verismos sold in the holiday quarter, Starbucks was only able to dent the roughly 2 million Keurig sales that Green Mountain saw in its previous quarter.
Another big advantage is the firepower that Green Mountain has brought into its corporate boardroom. Getting over past board scandals, the company has brought on eight independent directors for its board of 10 members, many of whom have huge amounts of experience in the consumer space.
But the big question facing Green Mountain going forward is whether it will participate further in the new wave of merger and acquisition activity in the industry. With Caribou Coffee having been taken private, smaller companies Coffee Holding Co., Inc. (NASDAQ:JVA) and Farmer Brothers Co. (NASDAQ:FARM) have seen interest levels in their stocks rise, partially in speculation that the takeover craze might lead to further gains. Green Mountain is big enough, though, that it's likely to be an acquirer rather than a target, and the company has already made a number of buys of K-Cup sellers.