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Keurig Woes Has Analysts Reducing Their GMCR Estimates

The Chilly Reception Of Keurig Kold Has Analysts Reducing Their GMCR Estimates Into Tonight’s Report by Estimize

After today’s closing bell, Keurig Green Mountain will release results for FQ4 2015, and the stakes are high. After three consecutive quarters of missing earnings and revenue expectations, investors are looking for improved fundamentals. Currently the Estimize community anticipates EPS of $0.71, a cent higher than the Wall Street consensus, yet two cents lower than company guidance. Adding to the mounting pressure is the fact that earnings estimates have fallen 5 cents in the last month as analysts have continually revised downward. Revenues expectations are in-line at $1.025B, a decrease of $177M since the Q2 report. (Do you agree with these expectations? Get your estimate in here!)

Keurig GMCR

Keurig seems to be struggling in a couple of areas. Reverberations of the Keurig 2.0 flop are still felt nearly a year and a half after its initial launch. The latest brewer was not well-received due to its high price point and the fact that it was only licensed to work with K-cup pods, not third party brands as previous models did. Even though the company reissued new models that now accept other pods, the backlash continues, with brewer sales plunging 26% last quarter.

K-cup pod sales also fell 1% last quarter. While the decision to allow the second iteration of Keurig 2.0 to accept competitor pods was made in order to sell brewers, it came at the expense of selling K-cup pods. Competition for pods continues to heat up from the likes of  Starbucks, Kraft and others. The company’s strategy has been to keep their enemies close, even partnering with Target’s Archer Farms brand, BJ’s Wellsley Farms brand and Nestle, and earlier this year expanding its partnership with Dunkin’ Brands and J.M. Smucker.

Keurig GMCR

While trying to increase their product offering, Keurig seems to have hit another wall. Keurig Kold was officially introduced on September 29, a machine that promises “Chilled beverages at the push of a button.” Once again, this product was not well-received by the public. Complaints around the first iteration of Kold ranged from the machine being too large and loud, taking too long to cool down, pods that don’t always work, and flavors that are off. The biggest complaint, once again, is around price. At $300 for the machine, and then $1 per pod, the price alienates a large swath of potential consumers. Compare that to it’s nearest competitor, Sodastream, which prices a similar offering between $80 – $200.

We’ll be listening in for FY 2016 guidance this afternoon, as the company continually lowered fiscal 2015 guidance after the last few failed reports. As a result of all these troubles, the stock has fallen nearly 70% this year.

Keurig GMCR

GMCR data by YCharts

Be sure to get your estimate in here, before tonight’s report!