Keurig Earnings Preview: Downward Trend Finally Reversing?

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Keurig Green Mountain Inc GMCR will report its second quarter financial results after the market closes on Wednesday.

According to Estimize, the Street, the crowd and the company all expect to see a reversion of the downward trend in earnings witnessed in the last three quarters.

After three periods of quarter-over-quarter declines in earnings, Wall Street analysts anticipate earnings of $1.05 per share this quarter (on revenue of $1.157 billion), up from $0.88 per share (on revenue of $1.386 billion) last quarter. The crowd projects earnings of $1.07 per share (on revenue of $1.169 billion). The company guided earnings of $1.03 per share.

The graph above illustrates Keurig’s history of actual earnings versus estimates and guidance. The company has a record of comfortably surpassing its guidance, and usually beating estimates.

The earnings estimates for this quarter, however, imply a small year-over-year decline from the $1.08 per share reported in the second quarter of 2014.

Both the crowd and experts were considerably more constructive on Keurig’s earnings at the beginning of the year. This changed in early February, when estimates fell close to current levels.

Green Light On Keurig Green Mountain

In a recent report, analysts at Susquehanna initiated coverage of Keurig’s stock with a Positive rating and a price target of $154. According to a recent article, “there are a number of positive influences for the company's share price, including the ongoing growth in K-cup volumes in the mid-teens, Keurig Kold not yet being factored into the share price and the company's market share of 92 percent.”

The analysts explained that "K-cup volumes continue to grow in the mid-teens owing to expanding usage occasions and an expanding user base.” They see “further room for growth with single-serve brewer penetration in the U.S. still less than half of Europe and the fact that 50 million U.S. households with coffeemakers have yet to adopt the Keurig system."

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Posted In: Analyst ColorPreviewsCrowdsourcingTrading IdeasGeneralEstimizeSusquehanna
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