"A Q3 for the record books", Canaccord Genuity analyst Scott Van Winkle noted. "A big holiday for brewers implies a big 2012 for K-cups and we haven't even discussed Keurig brewers' availability in Starbucks stores in 2012 yet. The story isn't over yet for investors, despite a stock chart that would probably intimidate the best rock climbers from Utah to Vermont." Green mountain earned $56.3 million, or 37 cents a share, in the third quarter, more than double year-earlier earnings. Excluding one-time items, its profit came in at 49 cents a share, beating estimates by 13 cents. Revenue also came in more than double, to $717 million, topping expectations by $110 million.
K-Cup portion pack sales surged 136% to $485 million, while Keurig brewer and accessory sales soared 66% to $105 million. Green Mountain said it sold 1.1 million Keurig machines in its recent third quarter. It forecast fiscal 2012 EPS between $2.55 and $2.56 much higher than the $2.17 analysts had expected. Green Mountain expects sales next year to improve by 60% to 65% over this year.
"We expect several years of rapid growth, driven by rising penetration of Keurig single-cup coffee makers in coffee-drinking households that should drive higher revenue growth and even higher rates of earnings growth as the margin story unfolds," Van Winkle said Thursday. Green Mountain recently inked a deal with Dunkin' Donuts for K-Cup distribution as well. "All aspects of the Dunkin' distribution deal appear to meet our prior expectations," Van Winkle said in June.
Green Mountain said it expects the popularity of its Keurig one-cup brewing system to continue growing at a steady clip in the U.S., especially as brands like Dunkin' Donuts, Starbucks and ConAgra's ( CAG) Swiss Miss offer brewing pods for the system. -- Written by Miriam Marcus Reimer in New York.
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