GMCR Up 25% after Earnings Beat

Things looked pretty bleak for Green Mountain Coffee Roasters (NASDAQ: GMCR) two months ago.

Starbucks (NASDAQ: SBUX), the global coffee king, announced in late September that it was entering the single-serve coffee market – a space Green Mountain has dominated. GMCR shares declined 24% in a matter of a week. I wondered whether the move might be a “death blow” for the Vermont-based specialty coffee company.

Now, it appears, Green Mountain is back from the dead.

GMCR shares have risen more than 25% this morning after the company managed to blow analyst estimates out of the water in its fiscal fourth-quarter earnings report. Net income, excluding items, was 64 cents a share – well ahead of the 48 cents per share analysts were expecting.

Meanwhile, quarterly sales and next year’s earnings forecasts also improved.

Net sales for the quarter ended September 29 increased 33% from a year ago, outpacing analyst estimates by $44 million. And the company raised its projected earnings for its new fiscal year to a high of $2.74 a share, up from a high of $2.65 per share previously.

The brighter earnings forecast is especially encouraging given all the investor consternation about Starbucks entering the single-serve coffee fray. That Green Mountain expects sales to improve even as its Keurig machine is getting some added competition from Starbucks’ Verismo is a testament to the company’s firm grasp on the single-serve market.

At present, Green Mountain Coffee occupies roughly 90% of the single-serve coffee market.

Having risen to about $36 a share today, GMCR’s stock is suddenly the highest it’s been since May 2. Shares are still trading for roughly one-third of their $111 peak in September 2011.

But considering the stock dropped all the way to $17 a share less than three months ago, today’s move is a major step forward for a company that’s proving to be more resilient than some thought.

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