The Waterbury, Vt.-based coffee company announced after Monday's closing bell that it plans to release its fiscal fourth-quarter results after the closing bell on Thursday. The report has in limbo since Nov. 19 when Green Mountain disclosed the need to restate much of its past numbers to correct a number of different accounting errors.
The stock jumped $2.57, or 7.3%, to $37.72 in Tuesday's session following the news. Volume of 8.2 million, nearly double the issue's trailing three-month daily average of 4.5 million. The shares reached a 52-week high of $38.86 on Nov. 30, and at current levels, they're up about 29% year-to-date.
Green Mountain shares jumped following the announcement of the restatement as the market fears of problems related to M.Block & Sons, the fulfillment vendor for most of the at-home orders of Green Mountain's Keurig business unit's single-cup business, proved unfounded. The total impact of the restatement was pegged at 4 to 5 cents a share in net income.Canaccord Genuity reiterated a buy rating and $40 price target on the stock on Tuesday, saying it's hopeful the quarter will be a good one. The current average estimate of analysts polled by Thomson Reuters is for earnings of 20 cents a share in the three months ended in Sept. 30 on revenue of $359.2 million. "As opposed to any delayed quarterly report we've encountered in the past, we don't have any concerns that results or business trends are softer than expected but rather confidence that the trends are stronger," Canaccord said in a research note. "The qualitative conclusion we anticipate from the quarterly report is further closure to the accounting questions, which led to unfounded volatility in the shares, will occur." The firm expects both brewer and K-cup shipments will be strong. It anticipates the company will most likely beat its forecast of 1 million brewers, which would reflect year-over-year growth of 41%, and sees "modest upside" to its forecast of 323.6 million K-cups. Margins may be a particular bright spot, Canaccord said. "[W]e anticipate that the Q4 results provide further support for our belief that margin expansion is greater than investors recognize," the firm said. "While the Q4 could have plenty of additional costs, such as significantly greater audit and legal fees, we anticipate the margin leverage will be obvious and support higher earnings than forecasted."
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