Bed Bath And Beyond Keurig K Cups

The People on the Move - Jeffrey A. Tucker - Mises Daily

There are moments in history when the people are on the move, consistent with the logic of history, and no force on earth can stop them. You can see it in the images of Russians in 1990 pulling down cast-iron statues of Lenin. You can see it in the images of the Romanian people charging Ceausescu's palace in 1989.

And I just saw it last night at Bed, Bath, and Beyond as the people raided the towers of K-cups holding coffee and tea to go into the Keurig coffee maker that is the blazing-hot item for the holidays (second only to our new pocket paperback of Human Action ).

To understand why the Keurig coffee maker is firing up the forces of history in a progressive direction, we need to reflect on the dynamics of the relentless technological trend from the collective to the individual. In ancient times, bathing, for example, was a community activity: one pool of water that all people would visit. With technological progress came the family tub, in which people would dunk themselves one after another. In modern times, we each fill our own bath or take an individual shower.

Green Mountain Coffee Roasters Q2 2013 Earnings Preview

Here is a look at just how the company performed in Q2 2012 with analysts expecting the company to grow the top line at roughly 16% YOY:

Top-Line Growth

Bottom-Line Growth

Since GMCR's Q2 2012, much has taken place inside the company and in the marketplace. The coffee flavored drinks category has grown substantially while GMCR has seen its former CEO Larry Blanford replaced with the company's new CEO Brian Kelley. Additionally, the stock has climbed some 16% since its Q2 2012 reporting date. While the mighty GMCR tree had fallen hard on that day, it has risen slowly and steadily over the last 365 days.

Recent Guidance

As we move forward with our quarterly review, we have to take into account GMCR's most recently reported results and guidance for Q2 which showed the company raising its expectations for the full year. Green Mountain increased non-GAAP EPS estimate to a range of $2.72 to $2.82 per share. Don't be fooled by the raised EPS guidance as it was noted by management that this might very well be a factor of lowering Capex. GMCR lowered estimated capex to a range of $350 million to $400 million from a prior range of $380 million to $430 million. Having already completed half of Q2 when this guidance was offered to investors, it is hard to believe that any significant divergence from this view would have occurred during the quarter. This raising of earnings and lowering of capex spend may certify the leverage the company has currently with regards to operations. While new guidance seems to be a positive on the surface, GMCR has a history of repeatedly changing guidance during the year. In this case, however, Capital Ladder Advisory Group is of the opinion that management has developed the appropriate equation to leverage multiple aspects of its operations to support the current guidance. One such measure was employed already during the quarter as the company let go of workers 100+ workers.