Green Mountain Shares Dropped: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of single-serving coffee king Green Mountain Coffee Roasters (NAS: GMCR) were looking cold and unappealing to investors today as they fell as much as 14% in intraday trading after some bearish comments from a Wall Street analyst.

So what: For much of its publicly traded history, Green Mountain has been a lightning rod for investor criticism, in large part because of its sky-high valuation multiples. Those valuation multiples have been awarded by investors that have watched the company grow like a weed and have expectations that it will continue to show significant growth.

Stifel Nicolaus analyst Mark Astrachan threw some water on those hot growth hopes in a research note, saying that sales of the company's single-cup brewing machines are slowing. That's bad news in itself, but slowing brewer sales could, in turn, lead to slower K-Cup sales.

Now what: As with any analyst research note, Astrachan's view may highlight facts that investors hadn't been looking at -- in this case, shipments of brewers from China -- but it ultimately represents just a single view on the company and its shares. In fact, in reaction, KeyBanc analyst Akshay Jagdale issued a report that noted shipment tracking methods have changed, so the data aren't comparable. Meanwhile, here at The Fool, Green Mountain champion Rick Munarriz questioned whether Astrachan's analysis captures the full picture of Green Mountain's sales.

While this Fool enjoys the coffee that comes from Keurig brewers, I've never so much as sipped the shares thanks to the scorching valuation. I can certainly understand the excitement and admire the company's growth, but as a committed value investor, the stock is well out of my wheelhouse.

Want to keep up to date on Green Mountain Coffee Roasters?Add it to your watchlist.

At the time thisarticle was published Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters. Motley Fool newsletter services have also recommended creating a lurking gator position in Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.