KeyBanc Hot On Green Mountain Coffee (GMCR) Ahead of Q1 Results
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Price: $91.67 --0%
Rating Summary:
5 Buy, 15 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 6 | New: 33
Rating Summary:
5 Buy, 15 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 6 | New: 33
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KeyBanc offered a preview of Green Mountain Coffee Roasters (NASDAQ: GMCR) Q1 results, which are due next Wednesday (February 1) after market close. KeyBanc also provided some additional clarity on key longer-term issues, namely cap-ex, profitability of owned K-cups vs. licensed K-cups.
The firm expects EPS of $0.40, versus the Company's guidance range of $0.35-$0.40 and consensus of $0.37.
Keybanc said data from Study Logic showed that K-cup consumption increased 104% year-over-year in the December quarter to 1.7 billion cups compared to 102% in September and 90% for 2011. Keybanc said while they are not changing their numbers, the Study Logic K-cup consumption data had a 95% correlation to GMCR's system wide K-cup sales over the last 11 quarters.
On K-cup capex, the firm Cap-ex per cup of capacity is very similar to that of Nespresso and Dolce Gusto, which reaffirms our belief that GMCR is properly accounting for its capital expenditures. "In summary, we estimate that GMCR is spending less than $0.11 in cap-ex per K-cup compared to ~CHF $0.09 for Nespresso and ~CHF $0.10 for Dolce Gusto. We believe our estimate of $0.11 for GMCR could be high because we assume 100% of the $1.2 billion in cumulative cap-ex from FY07-FY12E is being spent on K-cups when in reality only a portion (albeit the majority) is being spent on K-cups," analyst Akshay Jagdale states.
On the profitability of owned K-cups vs. licensed K-cups, the firm notes the company's profitability has been increasing during a time when licensed K-cup brands have gained significant share. Study Logic data showed that since GMCR’s 2Q09 the share of GMCR owned K-cups has declined by 17 pts to 59% at the end of 4Q11. During that time gross margins have expanded by ~420 bps, Jagdale notes.
Starbucks and Dunkin Donuts each already have ~1% share of K-cup volumes, the analyst also notes. Folgers K-cups, which were launched in 4Q10, already have 3.6% share.
The firm's sales estimates is conservative, siting 2% below consensus and 4% below guidance.
KeyBanc reiterated their Buy rating and $80 price target.
For an analyst ratings summary and ratings history on Green Mountain Coffee Roasters click here. For more ratings news on Green Mountain Coffee Roasters click here.
Shares of Green Mountain Coffee Roasters closed at $51.05 yesterday.
The firm expects EPS of $0.40, versus the Company's guidance range of $0.35-$0.40 and consensus of $0.37.
Keybanc said data from Study Logic showed that K-cup consumption increased 104% year-over-year in the December quarter to 1.7 billion cups compared to 102% in September and 90% for 2011. Keybanc said while they are not changing their numbers, the Study Logic K-cup consumption data had a 95% correlation to GMCR's system wide K-cup sales over the last 11 quarters.
On K-cup capex, the firm Cap-ex per cup of capacity is very similar to that of Nespresso and Dolce Gusto, which reaffirms our belief that GMCR is properly accounting for its capital expenditures. "In summary, we estimate that GMCR is spending less than $0.11 in cap-ex per K-cup compared to ~CHF $0.09 for Nespresso and ~CHF $0.10 for Dolce Gusto. We believe our estimate of $0.11 for GMCR could be high because we assume 100% of the $1.2 billion in cumulative cap-ex from FY07-FY12E is being spent on K-cups when in reality only a portion (albeit the majority) is being spent on K-cups," analyst Akshay Jagdale states.
On the profitability of owned K-cups vs. licensed K-cups, the firm notes the company's profitability has been increasing during a time when licensed K-cup brands have gained significant share. Study Logic data showed that since GMCR’s 2Q09 the share of GMCR owned K-cups has declined by 17 pts to 59% at the end of 4Q11. During that time gross margins have expanded by ~420 bps, Jagdale notes.
Starbucks and Dunkin Donuts each already have ~1% share of K-cup volumes, the analyst also notes. Folgers K-cups, which were launched in 4Q10, already have 3.6% share.
The firm's sales estimates is conservative, siting 2% below consensus and 4% below guidance.
KeyBanc reiterated their Buy rating and $80 price target.
For an analyst ratings summary and ratings history on Green Mountain Coffee Roasters click here. For more ratings news on Green Mountain Coffee Roasters click here.
Shares of Green Mountain Coffee Roasters closed at $51.05 yesterday.
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