NEW YORK ( TheStreet) -- Given the recent popularity of Green Mountain Coffee Roasters GMCR, whose stock has soared 30% in four weeks, critics who remain with shovels in hand waiting to bury this company will have to postpone those plans .... again.
Much to their dismay, Green Mountain, whose business is built upon how well it gives its customers "a kick," is still alive and kicking. But the company still must overcome some self-inflicted wounds. To that end, despite my love for coffee, which, often gives me the jolt I need to crank out articles like these, Green Mountain has not been the easiest company to like. And this has had nothing to do with the company's brew.
First, questions have been raised by the Securities and Exchange Commission regarding the company's business practices, particularly how Green Mountain recognizes its revenue. This came after management had disclosed to the SEC that it had overstated its 2007 income by $4.4 million after tax, which amounted to a cumulative 3 cents per share. Not to mention, the SEC also made inquiries about the company's relationship with a fulfillment vendor.
Fast-forward a couple of years later, the SEC returns. This time authorities announced that it had filed a civil enforcement action against Chad McGinnis, a former Green Mountain employee, alleging insider trading of the company's stock. It's worth noting that the company cooperated fully with the SEC and immediately took action to clear its name from any wrongdoing.
Last but not least, I believe the Street is being a bit presumptuous believing Green Mountain is now out of harm's way following the expiration of it K-Cup patent. It's true that it has been over one year since the expiration, but rivals have also now captured 8% of the single-serve market share, which is already 3% higher than the 5% market share Green Mountain management predicted it would relinquish. Not to mention, this has come at a much quicker pace than the company predicted.