Green Mountain Coffee Roasters
Green Mountain Coffee Roasters, originating as a quaint café in Vermont, has grown into a major player by focusing on organic and fair-trade coffee. Their partnership with Keurig allows them to sell coffee through K-Cups, which constitutes the majority of their sales and highest profit margins. Despite a recent upgrade in credit rating to 'B+', challenges remain, including significant uncertainties around their financial metrics and market performance. Evaluating factors such as the cost of equity and debt reveals complexities in predicting GMCR's future trajectory.
Green Mountain Coffee Roasters
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Presentation Transcript
Green Mountain Coffee Roasters Matt Moore
Background • Started as small café in Vermont • Organic and Fair-Trade Coffee • Keurig Machines & K-Cups • Sell to wholesale Customers • Most of sales from K-Cups • Highest margins are on K-Cups
Cost of Debt 10-K: 4.0% Calculated using int exp: 7.2% Significant difference, will use 10-K.
Credit Rating Sept 2013: S&P upgraded from GMCR Credit Rating from “BB-” to “B+” Positive change, but still not considered “High Grade, High Quality”
Betas Wide variety of different betas Beta I calculated in the middle 95% CI: -.079 2.25 Both NASDAQ above CI, Bloomberg close
Uncertainty There is a lot of uncertainty around CMCR While the Sales & R&D are greatly improving, betas are scattered across the board, WACC is high, and credit rating is low Hard to predict future given such contradictory factors
