This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Green Mountain Coffee: More Accounting Issues Ahead?


NEW YORK ( TheStreet) -- After Green Mountain Coffee Roasters (GMCR) announced the planned restatement of financial earnings for several fiscal years last Friday, TheStreet spoke with our Market Movers portfolio manager Ken Shreve about whether the stock was still a good trade and whether more accounting issues should be expected.

Coffee Stock Poised to Pop

TheStreet: GMCR has restated its financial statements for a number of fiscal years and quarters in light of the recent Securities and Exchange Commission investigation into its revenue recognition practices. Should we be bracing for more accounting issues ahead?

Shreve: "You know, I don't think so. I think this resolution came much quicker than Wall Street had anticipated. The news could have been much worse. They found some discrepancies that looks like it's going to impact earnings, by 4, 5 cents a share. So judging by the stock's reaction on Monday, I think it was up close to 18% -- its technical picture went from looking really, really bad; there were clear signs of institutional selling. Investors were worried this was going to be a really long, drawn-out process -- but the quick restatement most likely means this SEC inquiry is going to end as an informal one. It's peeled away a significant amount of uncertainty in the stock and I'm more positive on the stock certainly than I was last week."

TheStreet: What do you think of GMCR's valuation right now? Is it cheap? Expensive?

Shreve: "It's always been a high multiple stock, but this is a company that really has a bona fide track record of growth. It has displayed very strong year-over-year growth. Recent quarterly results have been outstanding. The stock was trading at 69x trailing earnings and 30x forward earnings. But again, this is a company that's expected to grow annual earnings this year 87% from 2009, and then you look out into 2011, and they're expected to grow earnings 66% from 2010. So when you look at a 30x forward multiple, arguably, the stock is still cheap."

"So valuation wise, it looks expensive, but I think investors are going to need to remember this is a very fast-growing company with a good track record of growth, and it looks like growth is expected to continue over the next several quarters."

Investors previously expected Green Mountain Coffee Roasters to report fourth-quarter earnings on or around Nov. 11. But in its statement on the restating of financial records last Friday, the Green Mountain said it now expects to file its 10-K annual report, including restated financials, no later than the Dec. 9 deadline for an accounting extension period. The company says it can't guarantee the filing will be made within this period.

>>Search for Highest Dividends by Rate or Yield

More on Earnings
Today's Top Earnings
Earnings Calendar

-- Written by Andrea Tse in New York.



>To contact the writer of this article, click here: Andrea Tse.

>To follow the writer on Twitter, go to Andrea Tse.

>To submit a news tip, send an email to: tips@thestreet.com.

RELATED STORIES:


Copyright 2010 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,987.51 -61.49 -0.36%
S&P 500 1,985.54 -11.91 -0.60%
NASDAQ 4,567.5980 -24.2080 -0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs