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 (NASDAQ: GMCR) 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.
Sean O'Reilly has no position in any stocks mentioned. The Motley Fool recommends Keurig Green Mountain. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.