Green Mountain Coffee Roasters Valuation
TABLE OF CONTENTS
Executive summary
Company overview
Business units Specialty coffee Keurig system Canadian Business Unit
Business Model Supply Chain Social Responsibility
Industry Environment
GMCR’s Competitive Advantage Quality, Convenience, and Choice
GMCR’s Growth Prospects National Sanitation Foundation (NSF) Approval Starbucks/Tazo Tea Strategic Partnership Snapple Partnership
SWOT Analysis Strengths Beverage Choice Options Sustainability Image Keurig Business Unit Weaknesses Single Supplier for Keurig Machines Single Order Processing Partnership SEC Investigation Opportunities Collaborations International Expansion Entry into Functional Drinks Market in the US Threats Highly Competitive Specialty Coffee Market Inability to Patent Roasting Methods
SEC Investigation
Decreased Availability of Arabica Coffee Beans
Forecast Assumptions Sales Growth Rates
Profit Margin Asset and Liability Growth Non-Growth Constant Growth Dividend Payout Ratio Miscellaneous Assumptions
Forecast Results Debt vs. Equity Additional Financing Needed Debt to Equity Ratio
FCFE
Cost of Capital Finding Beta Bottom-up Beta Top-down or Regression Analysis Beta Final Beta Estimation Cost of Equity Cost of Debt
Valuation Results
Bibliography
Appendix
EXECUTIVE SUMMARY This paper is a summation of extensive research into the current and forecasted valuation of Green Mountain Coffee Roasters (Nasdaq: GMCR). By utilizing the forecasted Free Cash Flow to Equity method, we derived an estimate of GMCR’s actual stock value. These results give us a true market value of $108.50, meaning that as of right now the company is undervalued by 29.9%--the stock closed at $76.09 per share as of 6/07/13 (Yahoo! Finance). The information contained herein details GMCR’s business model, the coffee production industry as a whole, GMCR’s strengths, weakness,
Executive summary
Company overview
Business units Specialty coffee Keurig system Canadian Business Unit
Business Model Supply Chain Social Responsibility
Industry Environment
GMCR’s Competitive Advantage Quality, Convenience, and Choice
GMCR’s Growth Prospects National Sanitation Foundation (NSF) Approval Starbucks/Tazo Tea Strategic Partnership Snapple Partnership
SWOT Analysis Strengths Beverage Choice Options Sustainability Image Keurig Business Unit Weaknesses Single Supplier for Keurig Machines Single Order Processing Partnership SEC Investigation Opportunities Collaborations International Expansion Entry into Functional Drinks Market in the US Threats Highly Competitive Specialty Coffee Market Inability to Patent Roasting Methods
SEC Investigation
Decreased Availability of Arabica Coffee Beans
Forecast Assumptions Sales Growth Rates
Profit Margin Asset and Liability Growth Non-Growth Constant Growth Dividend Payout Ratio Miscellaneous Assumptions
Forecast Results Debt vs. Equity Additional Financing Needed Debt to Equity Ratio
FCFE
Cost of Capital Finding Beta Bottom-up Beta Top-down or Regression Analysis Beta Final Beta Estimation Cost of Equity Cost of Debt
Valuation Results
Bibliography
Appendix
EXECUTIVE SUMMARY This paper is a summation of extensive research into the current and forecasted valuation of Green Mountain Coffee Roasters (Nasdaq: GMCR). By utilizing the forecasted Free Cash Flow to Equity method, we derived an estimate of GMCR’s actual stock value. These results give us a true market value of $108.50, meaning that as of right now the company is undervalued by 29.9%--the stock closed at $76.09 per share as of 6/07/13 (Yahoo! Finance). The information contained herein details GMCR’s business model, the coffee production industry as a whole, GMCR’s strengths, weakness,
Bibliography: Starbucks/Tazo Tea Strategic Partnership On May 08, 2013, Starbucks Coffee Company (NASDAQ: SBUX), the world’s largest coffee retailer, and Green Mountain Coffee Roasters, Inc Snapple Partnership On May 15, 2013, Green Mountain Coffee Roasters, Inc., (NASDAQ: GMCR), and Snapple have announced the launch of three varieties of Snapple® K-Cup® packs for Keurig® single cup brewers