NEW YORK (TheStreet) -- Keurig Green Mountain (GMCR) shares are climbing, up 0.7% to $114.86 in early market trading on Thursday, after the company announced that it will raise its coffee prices by 9% in November in an effort to offset the rising cost of coffee, packaging materials, energy and transportation.
The price of green coffee alone has increased 55% over the past year.
“Many of our competitors already have implemented price increases in light of the reality of sustained input cost increases. After careful review, we determined that it is necessary for us to adopt a small price increase in light of these higher costs," the company said.
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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 some important positives, 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, 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 analysis by TheStreet Ratings Team goes as follows:
- GMCR's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 5.7%. 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. To add to this, GMCR has a quick ratio of 2.32, which demonstrates the ability of the company to cover short-term liquidity needs.
- KEURIG GREEN MOUNTAIN INC has improved earnings per share by 23.7% 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 ($3.80 versus $3.16).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 33.4% when compared to the same quarter one year prior, rising from $116.27 million to $155.15 million.
- 49.91% 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 15.17% is above that of the industry average.
- You can view the full analysis from the report here: GMCR Ratings Report