Keurig Green Mountain Inc. soared 18 percent after beating earnings estimates and boosting its dividend, raising optimism that the company can recover from recent missteps.
Fourth-quarter profit amounted to 85 cents a share, excluding certain items, the Waterbury, Vermont-based company said in a statement Wednesday. Analysts had estimated 71 cents on average, according to data compiled by Bloomberg. Keurig raised its quarterly dividend 13 percent to 32.5 cents a share.
The results brought a measure of hope to investors after a punishing year for Keurig, which lost almost three-quarters of its market value over the past 12 months. The maker of single-serving coffee systems has suffered from waning sales of its K-Cup containers and lower prices on brewers. A new cold brewer also has been poorly received, and the strong dollar pulled down international sales.
While those challenges were reflected in the fourth-quarter earnings, the company’s cost-cutting efforts bolstered results. Sales also exceeded projections. Keurig reported $1.04 billion in sales during the period, which ended Sept. 26. Analysts had estimated $1.03 billion.
“I’m particularly pleased with the benefits realized from our cost-reduction efforts as well as our strong cash generation, both of which exceeded expectations,” Chief Executive Officer Brian Kelley said in the statement.
The stock gained $7.38 to $47.88 in New York, the biggest rally since February 2014. Earlier this week, the shares were trading at their lowest level in almost three years.