Bear Of The Day: Keurig Green Mountain
Keurig Green Mountain has consistently been a Zacks #4 Rank (Sell) or #5 Rank (Strong Sell) since May 11 when it was trading above $100.
And this explains why the stock has taken a nose-dive since then as analysts cut their profit outlooks. The Zacks Rank tells you right away if they are raising or lowering earnings estimates, the number one driver of stock prices.
My colleague Eric Dutram addressed the business concerns that led to these downward estimate revisions in his May 22 "Bear of the Day" article...
Sales for GMCR have been pretty weak to start the year and cost concerns are piling up thanks to some new products. Chief among these are the Keurig 2.0 as well as the KOLD brewing system as we are starting to see some issues with the 2.0 system while the KOLD brewer costs $300, a price that some might balk at to start off.
These concerns are causing many analysts to reconsider their opinion of the stock, as well as GMCR’s near term outlook. After all, GMCR called 2015-2016 an ‘investment year’ which is often code for lower profits and margin concerns.
Green Goes Red
In the last 30 days since his report, more analysts have lowered estimates, knocking down next year's full year EPS forecast from $4.23 to $4.11, representing just 11.4% annual growth.
And this after 2015 EPS projections went into the red for growth. The Zacks Detailed EPS Tables below tell the tale of Wall Street analysts recently underwhelmed by GMCR prospects...
Until these EPS estimates trade the decaf for espresso and stop going down the mountain, investors may want to find a different brew for climbing stock profits. Just like it told you a good time to sell, the Zacks Rank will alert you when it's time to order Keurig again.
Kevin Cook is a Senior Stock Strategist for Zacks.com where he runs the more