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Green Mountain Poised for a Rebound

David Becker
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Green Mountain is the maker of Keurig-brand single cup coffees and the company posted higher-than-expected profit for the third quarter. Sales of Green Mountain’s K-Cups and single-cup brewers rose during the quarter, bringing in a profit of $0.89 per share for the quarter when analysts had expected the figure to be around $0.75.

The 52-week range for the stock price is $ 27.88 – $89.66. Earnings increased 39% quarter over quarter and the company boasts a 3-year earnings growth rate of 62%. Sales increased 11% quarter over quarter and the 3-year sales growth rate is 47%. The company has a profit margin of 17% and a 1.5% dividend yield which is very solid for a growth company. The company only has 9% debt and has a price to earnings ratio of 19.

Recent insider purchase of GMCR is a positive sign for future price action. Normal Wesley purchased 10,000 shares on November 25, 2013 for a total value of $682,500, and David Mackay also purchase 10,000 shares on November 25, 2013 for a total value of $695,050.

The technical picture for GMCR is positive. The stock price hit a 6-month low in November but seems to have found support near the 200-day moving average. Momentum is positive as the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. The RSI (relative strength index) is printing near 64, which is on the upper end of the neutral range. The 20-day moving average crossed above the 50-day moving average reflecting that a medium term up trend is now in place.

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