Editor's Note: Below is a discussion between Jim Cramer and Herb Greenberg on RealMoney's Columnist's Conversation early Thursday morning regarding issues related to investing in Green Mountain's (GMCR) stock.
By Jim Cramer
Nov 21, 2013 6:46 AM EST
Good: when a company announces a big dividend, a huge buyback and better than expected earnings with good penetration and new products.
Bad: when a company slashes a dividend, or eliminates a buyback, misses earnings and has no innovation.So Herb, do I have it backward? Is bad actually good and good actually bad? Position: none ___________________________ Some Kool-Aid With that K-Cup, Jim?
By Herb Greenberg
Nov 21, 2013 7:25 AM EST You're assuming there is a one-size fits all. When new divvy and big buyback are announced at a company where growth is slowing I'd say you've a company pulling out all stops to stem a shareholder revolt. Take a look at growth: It's going the wrong direction. Margins? Sequentially (which counts in this situation) off a cliff -- and that's WITH the aid of lower coffee prices and a laundry list of one-time (or, let's say, not sustainably to-be-counted-on) items. Guidance? Here's Stifel's Mark Astrachan, who rates the stock a sell: "The company lowered expectations for F2014 sales growth (now high single-digit growth, was low double-digit) and EPS growth (now 11%-14%, was high-end of mid-teens), and guided F1Q14 sales growth to be below consensus (low-to-mid single digit, consensus 7%-8%). We believe new guidance implies modest over-shipment relative to demand in F4Q13 and slowing K-Cup sales growth, largely a result of share gains for unlicensed brands and worsening price/mix." (You would think he was on a different call and covering a different company than the other analysts on the call.)
By Jim Cramer
Nov 21, 2013 7:38 AM EST Total battleground ...but, and this is the issue I often face, if you are right what MORON is buying the stock up here? Did they just fool all of the people all of the time? You make it sound like Keurig 3.0 is right now on the Voxeljet drawing board! Position: none ______________________________ Jim - GMCR
By Herb Greenberg
Nov 21, 2013 8:00 AM EST Let me first stop laughing about Keurig 3.0 and Voxeljet. Great line! This is a story over substance. Earnings quality stinks. There are analysts who believe K-Cup volume numbers make no sense in the wake of IRI numbers. But as we've learned: As long as all analysts cheerlead, especially in this market, stocks go higher until the company comes out and gives up the ghost. Green Mountain already did that once, but the stock rebounded -- even in the face of sliding sales. if Keurig 2.0 does a repeat of Vue 1.0 it's likely game over. Between here and there Wall Street will likely do what it does best: Buy into the dream. Now the question is: Will consumers? Will they really give up their Keurig 1.0s if they're working to buy the 2.0? Will they give up their choice to walk down the coffee aisle and enjoy the price competition? Will coffee companies buy in for fear of being left behind? Sounds like a huge gamble/risk to me. This is NOT Apple. Position: None
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