Green Mountain Coffee Roasters Inc. (GMCR) is Losing its Taste! – Starbucks Corporation (SBUX)

Profits maintained but outlook Terrible

On Feb. 6, 2013 Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) reported Earnings per Share of $0.76 per share versus analyst estimates of $0.65 per share. Sales were right in line with analysts estimates and the company’s estimate of $1.33 billion dollars. The problem is that it gave weaker guidance for the 2nd quarter of 2013, guiding sales of $1.03 billion dollars versus analyst estimates of $1.06 billion dollars. The company sees guidance for the 2nd quarter of net sales growth to be between 15% and 20%. So the growth here seems to be slowing, which could prove to be disastrous in the coming year of 2013!

Coffee Wars

It seems Starbucks Corporation (NASDAQ:SBUX) isn’t wasting any time on Green Mountain’s Coffee patent expiration. Starbucks Corporation (NASDAQ:SBUX) has had it’s own K-cup product out, and it can be used with the Kuerig brewing system. The difference, though, is that Starbucks Corporation (NASDAQ:SBUX) seems to be having better growth, considering it’s same store sales have been better than competitors growing at 20%.  Starbucks Corporation (NASDAQ:SBUX) packs a huge punch with it’s 18,000 stores nationwide, and seems to be a big competitor against Green Mountain Coffee. Starbucks Corporation (NASDAQ:SBUX) is starting to grow bigger as it earned $432.2 million at $0.57 a share compared to last year in 2012, when it earned only $382.1 million, or $0.50 a share.

Bottom Line

Investors should remain cautious on Green Mountain Coffee as its product line doesn’t seem to be making the profits it used to. With growth slowing, patent expirations, terrible promotions, and new products not heating up the market space it seems like Green Mountain Coffee may roast your portfolio instead of boosting it. Starbucks seems like a promising competitor, and if Green Mountain Coffee doesn’t find a way to boost its growth again or get people excited for it’s new “Vue V500 brewing system,” then earnings won’t go well next quarter for the company.

The article Green Mountain Coffee is Losing its Taste! originally appeared on Fool.com and is written by Terry Chrisomalis.

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