Stock To Watch: Keurig Green Mountain (GMCR) In Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Keurig Green Mountain ( GMCR) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Keurig Green Mountain as such a stock due to the following factors:

  • GMCR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $239.4 million.
  • GMCR has traded 380,965 shares today.
  • GMCR is down 3.3% today.
  • GMCR was up 8.4% yesterday.

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More details on GMCR:

Keurig Green Mountain, Inc. is engaged in the specialty coffee and coffeemaker businesses in the United States and Canada. The company operates through two segments, Domestic and Canada. The stock currently has a dividend yield of 0.9%. GMCR has a PE ratio of 31.9. Currently there are 5 analysts that rate Keurig Green Mountain a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Keurig Green Mountain has been 3.0 million shares per day over the past 30 days. Keurig Green Mountain has a market cap of $18.3 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.60 and a short float of 12.3% with 7.58 days to cover. Shares are up 61.6% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Keurig Green Mountain as a buy. 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, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • GMCR's revenue growth has slightly outpaced the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 9.8%. 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 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.84, which clearly demonstrates the ability to cover short-term cash needs.
  • KEURIG GREEN MOUNTAIN INC has improved earnings per share by 18.4% 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 ($3.78 versus $3.16).
  • 47.54% 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. Along with this, the net profit margin of 14.69% is above that of the industry average.
  • Net operating cash flow has increased to $320.94 million or 19.95% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -18.05%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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