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Green Mountain Coffee Roasters

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. Competitors. Mod 9 Recap.

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Green Mountain Coffee Roasters

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  1. Green Mountain Coffee Roasters Matt Moore

  2. 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

  3. Competitors

  4. Mod 9 Recap Enterprise Valuation = Debt + Equity Equity valuations discouraged since need to assume leverage will be constant Achieving steady state is more important than leverage Mid-Year Adjustment to make payoffs occur evenly through the year

  5. Mod 9 Recap Equity Valuation using Residual Income Model Return on Equity Equation

  6. Equity Value Values in ‘000s Enterprise Value = 7,969,275 Debt = 173,200 Equity Value = 7,796,075

  7. Equity Value 2013 Debt = $173.2 million 2012 Debt = $473.7 million No reason provided for the large change

  8. Sensitivity Matrix

  9. Analyst Report

  10. Analyst Report

  11. Equity Price Equity Price of $73.25 Price as of 3/21 $112.00 Earnings release on 9/30, substantial changes since then

  12. Company Issues SEC Investigation for accounting practices Introduced Keurig Cold recently Patent on K-Cups expired, trying to invent different type of K-Cup to get new patent

  13. Mod Issues • Large changes in debt for GMCR • Analyst Reports were varying • Some say buy, but others think its overvalued

  14. Buy/Sell/Hold Too much uncertainty around company to make decision, therefore hold

  15. Questions

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