K-cups for everyone!
Shares of Green Mountain were climbing higher Thursday after the company announced Q1 results that topped expectations. Earnings came in at $0.60 per share on revenue of $1.16 billion while analysts were looking for $0.36 on $1.06 billion. The beat was driven by strong sales of both Keurig brewers and K-Cup units.
The company sold 4.2 million brewers in the quarter, well ahead of Canaccord Genuity Consumer Product Analyst Scott Van Winkle’s estimate while K-Cup growth of 81% was ahead of his 62% growth forecast. He notes that nearly every metric improved and growth rates accelerated in the quarter.
Originally, he was expecting a good quarter with in-line results that demonstrated strong revenue and earnings growth. If upside materialized, he expected maybe a few more brewers or more favorable gross margin expansion driving some EPS upside. He never envisioned 50% upside to his brewer forecast and even the most bullish buy-side forecasts he heard were still only in the low 3.0-million range vs. the 4.2 million reported.
Management maintained its F12 earnings estimate, but did reduce its Q2 forecast, which Van Winkle believes was due to sales and earnings that were likely pulled to Q1. He estimates that half of the Q1 upside comes at the expense of Q2 guidance. Van Winkle remains bullish on Green Mountain, expecting several years of rapid revenue and earnings growth driven by rising penetration of Keurig single-cup coffee makers in North American households.
Green Mountain (GMCR : NASDAQ : US$66.42), Net Change: 12.79, % Change: 23.85%, Volume: 24,235,284
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