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    A Low Risk Trade In Green Mountain Coffee Shares

    Sat, 11/26/2011 - 11:49 EDT - Seeking Alpha
    • DNKN
    • GMCR
    • JVA
    • KFT
    • PEET
    • Rash Menaria
    • SBUX
    • SJM

    By Rash Menaria: I wrote an article after Green Mountain Coffee Roasters' (GMCR) last quarter earnings recommending buying the stock after its steep correction. My main arguments were the low valuations of GMCR and the continued strength in demand at consumer level for the company’s product. The stock closed at $40 on the first day after reporting. It has recovered ~25% since and is now trading around $50 despite of the steep market correction since then. If we look at current valuation of GMCR, it is trading at 17.9x CY 2012e EPS. This is in line with the average forward PE multiple of its peer group despite of significantly higher growth rate.
    Trailing PE Current Year PE Forward PE
    JVA 19.11 13.56 9.56
    PEET 41.28 36.60 30.84
    SBUX 26.87 22.32 18.48
    SJM 15.18 14.52 13.16
    DNKN 45.20 27.38 20.88
    KFT 16.99 15.12 13.57
    Average 27.44 21.58 17.75
    I believe GMCR’s share will findComplete Story »

    • Original article
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    Related

    • Why Coffee Holding Co. Is Better Buy Than Green Mountain Coffee Roasters

      By Jason Bond:Green Mountain Coffee Roasters Inc. (GMCR) shares had a phenomenal run for over six months after bottoming out at $17.11 in July last year. Between July 24, 2012 and February 6, 2013, GMCR shares surged nearly 180%. However, the six-month long rally ended earlier this month after Green Mountain Coffee Roasters gave a weak sales forecast for its second quarter.

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      By Bill Maurer: There has been a lot of consolidation in the coffee and tea business lately. Recently, Caribou Coffee (CBOU) became the latest acquisition to be announced. The acquirer of Caribou already has made strides into this space, purchasing Peet's Coffee and Tea last summer.

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      By Norman Tweed:On August 17, 2012, the J. M. Smucker Company (SJM) released earnings that topped analyst estimates by a significant amount. According to Reuters, it made $1.17 for Q1 2013, beating analyst's estimates of $1.00 by 17%. Last quarter, Q4 2012, it earned $1.10 vs analyst's estimates of $0.99 for an 11.1% beat. Estimates for Q2 2013 are $1.41 and Q3 2013 are $1.44.

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