Rise and Shine: It's Coffee Time
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Warning: I hate coffee. It always seems to leave a bad taste in my mouth. Readers should view this as a good thing, because I will not be prejudiced toward my favorite tasting coffee. Every few years I try it again to see if my tastes have changed, but they never do. This post will not argue which coffee tastes best, because in my opinion, they all are worth forgetting. Let's take a look at how coffee companies are performing without my involvement.
Folgers is owned by J.M. Smucker Company (NYSE: SJM) whose business model allows them to manufacture and market branded food products worldwide. This company has a market cap of $9.6 billion and exceeded sales of $5.5 billion in 2012. 2007 marks the only year that revenues have decreased in the past decade, but that didn't stop revenues from growing 257% since then. With an 8.2% Free Cash Flow (FCF) yield the stock seems to be fairly cheap despite increasing over 12% in the past year. This company seems to grow its stock very steadily, increasing 124% in the past decade, and nearly 85% since 2008.
Although some people may not immediately think of coffee when they hear Dunkin' Donuts (NASDAQ: DNKN), the company certainly has a market for the black drink. The company just went public in 2011 and hopes to grow into a major force in the industry. With over 75% of the company's revenues being acquired through U.S. stores, they still have nearly 3,000 stores in 30 countries. Shareholders have experienced a fun year as the stock has soared over 30%. With Smuckers market cap 252% larger than Dunkin' Donuts, the company's FCF yield is only 3.4%.
Starbucks (NASDAQ: SBUX) is the world’s largest coffeehouse chain with over 18,000 stores worldwide and intentions to open an additional 3,000 locations. Revenues have more than tripled in the past decade, with only one down year over that time period. In 2012 alone the company's revenues increased by 17%, which increased their annual revenues to $13.3 billion. Starbucks market cap is nearly $42 billion, dramatically more than Dunkin' Donuts or Smuckers. The company's stock has increased 15% in the past year, and it shows a 3.3% FCF yield.
There is a major coffee brewer that is not performing so well, and has had to overcome some brewing troubles. Green Mountain Coffee Roasters (NASDAQ: GMCR) is a company that has had an SEC inquiry, a CEO dumping around $66 million in stock, excessive inventory growth, and an important patent expiration - plenty of things to worry about. However, it may not all be bad for this company. They have so many Green Mountain coffee machines distributed through offices, banks, and kitchens they may still be a viable investment option.
Due to these many obstacles, the company's stock has decreased around 30% in the past year. With outstanding reports in revenues for the past decade the company may still perform well. Capital expenditures increased 42% last year as it tries to grow. With $3.9 billion in revenues last year, a market cap of $6.9 billion, and a FCF yield of 4.4% things may not be so horrible for this company.
The Foolish Bottom Line...
Although I don't like the taste of coffee, some of these companies appear to present a pretty sweet deal. Smuckers appears to have the best value for those bargain investors, while the rest seem fairly priced. Green Mountain certainly has obstacles to overcome, but I see them pushing through at some point. Dunkin' Donuts seems to be a company looking to expand, while Starbuck's is always a good bet. I guess it’s time for investors to wake up and smell the coffee.
tlwofford has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. 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. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!