Greenberg: Coke's Green Mountain Stake Not a Day Too Soon

SAN DIEGO (TheStreet) -- News that Coca-Cola (KO) is taking a $1.25 billion, 10% stake in Green Mountain Coffee Roasters (GMCR) came in the nick of time.

While details remains sketchy, almost as if the deal was signed so it could be announced as a cover for earnings, this much is clear: Had this deal not been announced, rather than fly after the close, Green Mountain's stock would've likely been pummeled.

Its core business is in sharp decline. Sales growth for the quarter was a mere 4%, down from 10% the quarter before and nearly 16% a year earlier. Every key metric is just as bad: K-cup sales growth skidded to 8% from 21% a year earlier; brewer sales growth was a negative 1% versus a positive 14%. And that's after last year's stock-boosting announcement that it had extended a relationship with Starbucks (SBUX).

But, wait, there's more: Accounts receivable were up 21%, or more than 5-times sales -- almost always a red flag. Free cash flow tumbled 42%. Had it not been for lower coffee costs, which have since evaporated, margins would've looked weak, too.

Guidance, meanwhile, is lower than expected. The company talked about single-digit sales growth through 2015.

But not to worry, CFO Fran Rathke said the company believes the Coke deal, which spans 10 years, "will position us to return to our long-term double-digit earnings growth rate in fiscal 2016, and strongly position us for sustainable profitability over the next decade."

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