NEW YORK, May 31 (Reuters) - Shares of Green Mountain Coffee Roasters may be too hot and investors should look closely at the company's profits through purchases from royalty-paying licensees, Barron's reported in its June 1 edition.
With shares trading at almost 60 times earnings for the current fiscal year, investors should look closely at why earnings beat analyst forecasts by 40 percent while sales beat by only 8 percent, Barron's said.
The earnings increase was driven by an 85 percent increase in royalties the company gets from other companies selling coffee in its proprietary single-serve cups, called K-Cups, Barron's said.
Investors may justly worry if they understand this business's true profitability, Barron's said.
A company spokeswoman was not immediately available for comment.
(Editing by Carol Bishopric) Keywords: GREENMOUNTAIN (Reporting by Caroline Humer; email caroline.humer@thomsonreuters.com; Tel: 1-646-223-6181) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
With shares trading at almost 60 times earnings for the current fiscal year, investors should look closely at why earnings beat analyst forecasts by 40 percent while sales beat by only 8 percent, Barron's said.
The earnings increase was driven by an 85 percent increase in royalties the company gets from other companies selling coffee in its proprietary single-serve cups, called K-Cups, Barron's said.
Investors may justly worry if they understand this business's true profitability, Barron's said.
A company spokeswoman was not immediately available for comment.
(Editing by Carol Bishopric) Keywords: GREENMOUNTAIN (Reporting by Caroline Humer; email caroline.humer@thomsonreuters.com; Tel: 1-646-223-6181) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.