Green Mountain Coffee Roasters, Inc. - Momentum

Green Mountain Coffee Roasters, Inc. (GMCR) is a momentum high flyer, recently spiking to a new all-time high on news of a fresh deal with Starbucks. With estimates on the rise and a bullish growth projection, this Zacks #1 rank stock will perk up your momentum portfolio.

Company Description

Green Mountain Coffee Roasters, Inc. operates as a specialty coffee company in the US and internationally. The company was founded in 1981 and has a market cap of $9.75 million.

Starbucks Deal Sends Shares Soaring

Although Green Mountain has been strong for the last few years, shares took a quantum leap higher on March 10 when the company announced a deal with Starbucks to sell single-brew packets of its coffee. The single-brew space, using Kuerig brewing machines has been a huge source of growth for Green Mountain over the last few years and the deal should strengthen that trend.

Fourth-Quarter Results

Before news of the Starbucks deal hit the wire, Green Mountain pleased the Street with strong fourth-quarter results from late February that came in ahead of expectations.

Revenue for the period was up 67% from last year to $575 million. Earnings also looked good, coming in at 18 cents, 6% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 7% over the last three quarters.

As mentioned above, the strong quarter was driven by the company’s single-packet brew product K-Cup, where sales were up 89% from last year to $332.9 million.

Estimates

But in spite of the good news and optimism surrounding the company, we’re not seeing much movement in estimates, with the current year up 5 cents in the last 60 days to $1.23. The next-year estimate is up 4 cents in the same time to $1.77, a solid 44% growth projection.

Valuation

In light of recent gains, the valuation on Green Mountain looks a bit hot, with a forward P/E of 54X a sharp premium to the S&P 500 and its peers.

5-Year Chart

The 5-year chart provides a good view of the bullish long-term trend and the recent jump on the Starbucks deal. Take a look below.