Keurig Green Mountain Inc (GMCR) Q2 Earnings Preview

Keurig Green Mountain Inc (GMCR) Q2 Earnings Preview

Keurig Green Mountain Inc (NASDAQ:GMCR) will announce its fiscal second quarter results on Wednesday, May 7 after the market close. Helped by excellent top-line growth and improved operational efficiency, the Waterbury-based company’s earnings have exceeded Wall Street expectations for the past seven consecutive quarters. However, analysts think Keurig Green Mountain’s March quarter margins could be hurt by rising coffee prices. Severe drought in Brazil and some parts of Africa, combined with leaf rust has caused significant decline in coffee production. The supply shortage has pushed up the margins.

Keurig Green Mountain revenues expected to jump 4.30% YoY

Analysts polled by Thomson Reuters expect Keurig Green Mountain Inc (NASDAQ:GMCR) to report 95 cents in earnings, up from 93 cents in the same quarter last year. The company’s revenues are expected to jump 4.30% to $1.05 billion. Wall Street forecasts full year 2014 earnings to go up from $3.39 to $3.72 per share. Full year revenues are expected to jump 6.70% from $4.36 billion to $4.65 billion.

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Keurig Green Mountain Inc (NASDAQ:GMCR) shares have soared more than 26% this year so far, largely due to its partnership with The Coca-Cola Company (NYSE:KO). Investors expect the company management to shed light on the Keurig 2.0 and Keurig Cold launch dates, and the K-Cup pricing during the conference call. Coca-Cola’s $1.25 billion investment in Keurig gives consumers a reason to buy Keurig Cold upon launch. However, investors would want Keurig Green Mountain to join hands with other beverage companies for Keurig Cold as well.

Keurig Green Mountain can’t afford to delay the launch of Keurig 2.0

Keurig Green Mountain Inc (NASDAQ:GMCR) has to launch the Keurig 2.0 as soon as possible. Coffee pod prices have been declining consistently for the past several quarters due to fierce competition. The K-Cup prices plunged 2% during the last quarter. Patented technology of Keurig 2.0 has the potential to eliminate the pricing pressure. However, some believe that the massive success of Keurig 1.0 could work against Keurig 2.0 if the company delays the launch of its upcoming product. During the first quarter, Keurig Green Mountain sold 5.1 million units of Keurig 1.0 brewers. People who buy a Keurig 1.0 are unlikely to purchase a brand new Keurig 2.0 in less than a year.

Keurig Green Mountain Inc (NASDAQ:GMCR) shares gained 0.55% to $95.79 in pre-market trading Wednesday.

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