Green Mountain Coffee Roasters (NASDAQ:GMCR) shares can cause major jitters, but its most recent quarterly results poured caffeinated joy for investors. Looking closer, however, those shareholders might want to switch to decaf.

First-quarter net income actually dropped 13.2%, to $12.5 million, or $0.27 per share. Excluding last year's favorable patent litigation settlement, though, earnings rocketed a stunning 163%. Green Mountain's most recent quarterly results were also slowed by $5 million in transaction expenses for its acquisition of Timothy's Coffees of the World.

The quarter's sales were roasting, surging 77% to $349.4 million. Green Mountain managed to increase gross margins by 200 basis points to 29.1% of sales, compared to 27.1% this time last year.

The quarter was good enough that Green Mountain also added a dime to the top and bottom ends of its earnings guidance for fiscal 2010, now estimated at $1.95 to $2.05 per share.

Although Starbucks (NASDAQ:SBUX) recently pointed to its VIA instant coffee packets as a popular alternative to one-cup brewing systems, it looks like Starbucks' success with that product hasn't slowed down the momentum for Green Mountain's Keurig brewer and associated K-Cup packs. Green Mountain said K-Cup portion pack shipments increased 82%, to 650 million. That's a sequential increase from 70% growth in the prior quarter.

Meanwhile, thanks to wider distribution deals in outlets such as Wal-Mart Stores (NYSE:WMT), Green Mountain shipped 1.5 million Keurig brewers during the quarter, compared to 711,000 this time last year. That figure's also a massive jump from the 713,000 Keurigs sold in the prior quarter. Best of all, these massive sales position Green Mountain for fat future profits from the high-margin K-Cup pack business.

Green Mountain continues to defy rivals such as Starbucks, Caribou (NASDAQ:CBOU), and Peet's (NASDAQ:PEET). Its pending acquisition of Diedrich (NASDAQ:DDRX) -- having trumped Peet's offer -- should only provide further fuel for the company's growth.

I've often been bearish on Green Mountain over the years, given its premium stock price and acquisitive ways. Those sorts of purchases can be difficult to digest -- although in fairness, that strategy worked out well in Keurig's case -- and they make financial statements far more complicated for investors to peruse. Plus, its abundance of buyouts has weakened Green Mountain's balance sheet, decreasing cash by 58%, to almost $124 million in the quarter.

With its stock up more than 200% in the last year, Green Mountain trades at a forward price-to-earnings ratio of 44, trumping big-coffee rival Starbucks' forward P/E of 20. Despite its great results, I prefer stocks that are a tad less risky and pricey than Green Mountain is now, and I strongly suspect that investors should put down the coffee and walk away.

Are you thirsty for more from Green Mountain, or is its valuation too bitter for you to stomach? Sound off in the comment box below.

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Green Mountain Coffee Roasters is a Motley Fool Rule Breakers pick. Starbucks is a Stock Advisor selection. Wal-Mart Stores is an Inside Value pick.Try any of our Foolish newsletters free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.