Why Keurig Green Mountain (GMCR) Stock Is Surging This Morning

NEW YORK (TheStreet) -- Shares of Keurig Green Mountain Inc. (GMCR) are surging, up 6.55% to $98.25 in pre-market trade, following the release of its strong second quarter fiscal 2014 earnings.

Excluding some items, non-GAAP earnings jumped 16% to $1.08 a share.

Analysts had projected 94 cents on average, according to Bloomberg data.

Total sales were up 10% to $1.1 billion.

Separately, the company and The J.M. Smucker Co. (SJM) entered into a multi-year agreement that provides for the expansion of their partnership for the manufacturing, marketing, distribution, and sale of the Smucker family of coffee brands.

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TheStreet Ratings team rates KEURIG GREEN MOUNTAIN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate KEURIG GREEN MOUNTAIN INC (GMCR) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GMCR's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 3.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • GMCR's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GMCR has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.
  • KEURIG GREEN MOUNTAIN INC has improved earnings per share by 30.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KEURIG GREEN MOUNTAIN INC increased its bottom line by earning $3.16 versus $2.28 in the prior year. This year, the market expects an improvement in earnings ($3.66 versus $3.16).
  • 37.73% is the gross profit margin for KEURIG GREEN MOUNTAIN INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.96% trails the industry average.
  • Powered by its strong earnings growth of 30.00% and other important driving factors, this stock has surged by 61.84% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: GMCR Ratings Report

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