In an effort to offer up something positive to shareholders in the face of a 60% year-to-date drop in share price and an abysmal quarter, executives at Keurig Green Mountain (GMCR.DL) have offered up a whopping $1 billion share buyback. They had to do something, and spending a chunk of the company's still-sizable free cash flow was the best they could come up with.
Granted, this may not be a bad move -- especially in light of the fact that GMCR shares have crashed from last year's highs and the company trades for under 16 times forward earnings, according to S&P Capital IQ. But can this really be the best use of its capital? Read on to find out.
