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?
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.)