Peet's Coffee & Tea (NAS: PEET) beat estimates by $0.07 last quarter and investors are hoping it can beat them again. The company will unveil its latest earnings Tuesday. Peet's sells fresh roasted coffee, hand-selected tea, and related merchandise in several distribution channels, including grocery, home delivery, food service and office accounts, and company-operated retail stores.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Peet's with six of eight analysts rating it hold. Analysts don't like Peet's as much as competitor Jamba overall. Five out of seven analysts rate Jamba a buy compared with two of eight for Peet's. Analysts still rate the stock a hold, but they are a bit more wary about it compared with three months ago.
  • Revenue forecasts: On average, analysts predict $88.7 million in revenue this quarter. That would represent a rise of 9.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.32 per share. Estimates range from $0.30 to $0.34.

What our community says:
The majority of CAPS All-Stars see Peet's as a good bet, with 63.2% assigning it an "outperform" rating. The majority of the Fools are in agreement with the All-Stars as 68.5% give it an "outperform" rating. Fools have embraced Peet's and haven't been shy with their opinions lately, logging 137 posts in the past 30 days. Peet's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
Peet's profit has risen year over year by an average of 30.1%. Over the last four quarters, revenue has increased 6.8% on average year over year. The company's gross margin shrank by 31.9 percentage points in the last quarter. Revenue rose 9% while cost of sales rose 84.1% to $69.1 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

21.9%

23.4%

19.4%

53.7%

Operating Margin

9.8%

11.1%

7.3%

8.3%

Net Margin

6.2%

7.0%

4.7%

5.3%

For all our Peet's-specific analysis, including earnings and beyond, add Peet's Coffee & Tea to My Watchlist.

Motley Fool newsletter services have recommended shorting Peet's Coffee & Tea. 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.

At the time this article was published

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