Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Green Mountain Coffee Roasters (Nasdaq: GMCR) raised its mug to toast a modest earnings "beat" last night ... then promptly spilled coffee down the front of its new Christmas sweater, as it announced reduced expectations for next year's profit. Shares are down 11% already.

So what: Green Mountain grew its sales 73% in fiscal 2010, but earnings were up "only" 46% at $0.58 per share. But what looks at first glance like a story of rapid sales growth, coupled with margin compression, really isn't. The company believes 2010's trends will reverse next year, as sales rise perhaps 50%, but earnings more than double to about $1.24 per share.

Now what: That sure sounds like good news. Yet investors are focusing on the fact that in adjusting its profits predictions to $1.19 to $1.29 per share, Green Mountain actually lowered the floor on that range by a nickel. (Horrors!)

A better way to look at things might be this: At the midpoint of that guidance range, we're looking at a stock selling for roughly 27 times forward earnings -- on a company that most folks on Wall Street expect will grow north of 33% per year over the next five years.

But however much Green Mountain says it will "earn" next year, and however much it says it earned last year, this company's still burning cash at a frightening pace -- $128.5 million in negative free cash flow posted last year alone, after burning a grand total of only $44 million over the previous five years. (Next year could be even worse, with management promising to spend as much as $260 million on capital expenditures.)

I like to invest in businesses that make money, not burn it. My advice: Pour Green Mountain down the drain. I think you'll find a much better brew at free cash flow-positive java-meisters McDonald's (NYSE: MCD) and Starbucks (Nasdaq: SBUX).

Want to keep closer track of Green Mountain's ups and downs? Add it to your watchlist.

Green Mountain Coffee Roasters is a Motley Fool Rule Breakers choice, and Starbucks is a Motley Fool Stock Advisor selection, but Fool contributor does not hold positions in any company named above. The Motley Fool has a disclosure policy.

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