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Starbucks Likely To Brew Significant Gains For Your Portfolio
- Starbucks offers compelling growth potential (estimated at nearly 18% annually), but the shares trade at a premium multiple (25 times forward earnings).
- The DRAG analysis investigates the company's fundamental attributes and views its strong competitive position, flexible balance sheet and increasing dividend as positive factors.
- The resulting calculation demonstrates that, based on this framework, Starbucks shares are currently undervalued by 25% and therefore represent an attractive investment opportunity in the consumer sector.
- Starbucks' mobile ordering - a way to squeeze more sales out of each of its outlets, keep same store sales growth humming along, and fatten profit margins.
- The company faces an aggressive schedule and there are plenty of logistical issues to work out.
- But the potential payoff for Starbucks is huge.
- This is the first of a 10 part piece where I pick 10 stocks for the long-run.
- Starbucks has a solid moat and will still be serving coffee 20 years from now.
- Starbucks still has big potential in tea, China, and in its digital efforts.
Starbucks: Quietly Becoming A Dividend Growth Powerhouse
- Revenues in the latest quarter grew, but not as much as investors had expected and the company’s share price dropped.
- Lost in the disappointing revenue growth was a 23 percent dividend increase and a tripling of SBUX’s dividend since 2010.
- The company is becoming a powerful force in the dividend growth category of stocks.
- The long-term plans and objectives of SBUX management remain intact and will reward current and future shareholders.
- Prospective SBUX shareholders should wait for the share price to pull back before establishing a full position.
Starbucks Stock Fails To Woo Investors Despite Top Line Growth
- Starbucks sales see growth, but fail to meet analysts’ forecasts. Consolidated net revenues increased by 10% to $4.2 billion with a consolidated operating income of $854.9 million this quarter.
- Starbucks continues to exploit its innovative tradition and raised prices on its products. It was able to realize more revenue through raising prices.
- It plans to launch a nationwide delivery service based on a mobile app. This initiative carries a lot of potential but also carries some evident risks.
- Recovering world economy is likely to boost consumption expenditure in the future which could be seen as an opportunity to generate more sales.
- The coffeehouse company’s stock will not likely see any vertical growth anytime soon.
The Future Of Starbucks Looks Promising Going Forward
- Despite missing earnings, wonderful things are happening at Starbucks that investors can look forward to.
- Sales within the US remain strong while Starbucks continues to aggressively pound on EMEA opportunities.
- Investors should zoom their lens on the fact that Starbucks is taking massive steps to leverage on technology to fuel growth.
- There is still plenty of room for this coffee juggernaut to grow.
- While some were disappointed with Starbucks’ Q4 report, we are encouraged by the company’s strong and consistent sales growth.
- Starbucks is going mobile—pushing new frontiers of e-commerce in the food and beverage industry.
- The company proved resilient to a Q3 price hike; customers are apparently loyal.
- With feasible strategies for growth on the horizon, both domestically and internationally, we are optimistic on the company and stock as 2014 comes to a close.
- Starbucks released Q4 earnings on October 30.
- Dunkin' Brands released Q3 earnings on October 23.
- Both stocks reacted by moving to the downside.
- Which company had the better quarter?
- Starbucks 2.0 could be a major tailwind for sales and earnings growth going forward.
- SBUX is expensive but if the company can execute on mobile initiatives $75 could turn out to be a great buying opportunity.
- Innovation and a rabid customer base means that while SBUX is expensive, I'm getting bullish here.
- SBUX Q3 print was weak with EPS in-line but revenue missed on weaker comp.
- Mobile POS, smartphone app and food delivery should enhance overall quality of service.
- China/APAC still under-penetrated. Reiterate my bullish view on the stock.
Update: Starbucks' Earnings Guidance Weak, But Be Skeptical
- SBUX reported fiscal fourth-quarter results.
- The results neither lessened nor increased my already bullish opinion.
- I didn't anticipate the weak guidance, but I believe it is overblown.
Update: Starbucks Reports Record Q4 Earnings Per Share And FY 2014 ResultsJonathan Weber • Sat, Nov. 1
- Starbucks Q4 EPS reached $0.77, FY 2014 EPS were $2.71.
- I had forecasted comp sales growth, margin expansion and share repurchases.
- Starbucks' dividend was increased to $0.32 (up 23%).
- I reiterate my original conclusion: Starbucks trades below its fair value.
- Starbucks missed analyst estimates slightly due to weaker traffic.
- The company is taking actions to address the issue.
- The growth story is intact and double-digit growth is still here to stay.
- Valuation is not that bad after the sell-off, considering the growth rate.
Starbucks' Mixed Q4 Report Has Sent Shares Tumbling, Should You Be A Buyer?
- Q4 earnings were released after the market closed on October 30.
- The results came in mixed compared to expectations.
- The company announced a 23.1% increase to its quarterly dividend.
- The stock has responded by moving about 5% lower.
- The whisper number is $0.77, three cents ahead of the analysts' estimate.
- Starbucks has a 53% positive surprise history (having topped the whisper in 27 of the 51 earnings reports for which we have data).
- The overall average post earnings price move is 'as expected' (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.
- Starbucks has grown earnings per share at a very high rate over the last years and offers good fundamentals.
- The growth outlook for Starbucks still looks very good.
- Based on two fair value approaches Starbucks is undervalued at today's price.
- SBUX reports 4Q14 on Thursday after market.
- Favorable exposure to high-income earners; commands strong brand equity and pricing power.
- I prefer SBUX ahead of results. Am short MCD.
- Starbucks, Corp. is slated to report 4Q 2014 earnings after the bell on Thursday, October 30th.
- Earnings Per Share: Company guidance is $0.73 to $0.75. The current Street estimate is $0.74 (range $0.73-$0.75).
- Revenues: Analysts expect an increase of 11.6% y/y to $4.23 billion (range $4.18 billion to $4.30 billion).
- Starbucks will announce its earnings for Q4'14 on October 30 with a conference call held at 2:00pm.
- The Street estimate EPS is $0.74, or $0.14 higher than the same quarter of last year.
- By executing the express order and pay concept, Starbucks maintains its first moving advantage of digital implementation.
Thu, Feb. 6, 8:10 AM
- KeyBanc raises its price target on Green Mountain Coffee Roasters (GMCR) to $150. The investment firm is being listened to after calling out just two months ago the potential for a Coca-Cola partnership with GMCR. Shares of GMCR are up 43.7% premarket to $115.50 - a level last seen in 2011.
- The deal is a positive for Coca-Cola (KO) as it refreshes its ability to enter a new category with growth potential, says Stephanie Link. If there's a concern, it's with Coca-Cola bottlers (CCE, COKE, KOF) who now have a risk to profitability.
- Shares of SodaStream (SODA) have recovered nicely from their initial plunge following the KO-GMCR news and are now off only 2.9% premarket. There's plenty of speculation that PepsiCo (PEP) will be tempted to match Coca-Cola's move into home beverage systems with a SodaStream deal.
- No panic with Starbucks (SBUX), +0.4% premarket, as analysts see the company's comfortable relationship with GMCR unaffected.
Wed, Jan. 29, 4:14 PM
- Troy Alstead is named to the newly created position of chief operating officer, allowing CEO Howard Schultz to expand his focus on innovation in Starbucks' (SBUX) products and next generation retailing and payments initiatives.
- Alstead was previously CFO, and Scott Maw is promoted to fill that slot.
- CC at 5 ET
- Press release
Fri, Jan. 24, 8:11 AM
- If you're looking for a bear on the retail industry, look no further than Starbucks (SBUX) CEO Howard Schultz.
- During his company's earnings conference call, Schultz didn't blame the weather, strapped consumers, or heavy promotions for comparable-store sales falling below expectations as he warned on a larger trend: A lack of boots in the streets.
- "Holiday 2013 was the first in which many traditional brick-and-mortar retailers experienced in-store foot traffic give way to online shopping in a major way," said Schultz.
- He says the "pronounced" shift in consumer behavior is accelerating and isn't likely to reverse, but Starbucks is one of the few B&M chains well-positioned to evolve while the ground crumbles around the retail landscape.
- Starbucks earnings call transcript
- Related ETFs: XLY, XRT, VCR, RTH, RETL, FXD, FDIS, PMR, RCD, PEZ, PSCD
Thu, Jan. 23, 4:25 PM
- Starbucks (SBUX) reaffirms FY14 guidance, but comes in a tad short of analyst expectations.
- The company sees FQ2 EPS of $0.54-$0.55 vs. $0.56 consensus and 2014 EPS of $2.59-$2.67 vs. $2.66 consensus.
- A weak yen cut into the company's profit margin in its China/Pacific segment.
- Dollars loaded on Starbucks Cards jumped 24% Y/Y to $1.4B.
- Though light compared to the company's track record, the 4% gain in U.S. traffic for the quarter is solid compared to restaurant peers. Execs resisted the urge to cite weather factors as rivals have done.
- SBUX -0.1% AH
Thu, Jan. 23, 4:09 PM
- Starbucks (SBUX) reports same-store sales rose 5.0% during FQ1 in the Americas to fall short the consensus estimate calling for a 6.25% gain, but fall within the company's guidance range for mid single-digit growth.
- Global comparable-store sales rose 5.0% during the quarter vs. 5.7% consensus. Traffic was up 4%, while ticket prices rose 1% across all geographic segments.
- Operating margin rose 260 bps Q/Q to 19.2%, compared to Starbucks' 2014 guidance for a range of 19.1% to 19.6%.
- The company opened 417 net new stores during the quarter to reach a total store count of 20,184.
- SBUX -1.4% AH
Thu, Jan. 23, 4:06 PM| 2 Comments
Thu, Jan. 23, 10:59 AM
- The debate on Starbucks (SBUX -1.2%) continues to build with the company's store traffic in the U.S. to be a focal point with its Q4 report tonight.
- The massive $1.3B in gift card sales the company churned up during the holiday period is expected to have supported revenue totals, but weak mall sales amid tough winter weather along with a sluggish report from McDonald's earlier today suggests store traffic could disappoint.
- The company's guidance for "mid single-digit" same-store sales growth in the Americas leaves a lot of wriggle room. A mark over 6% would probably be enough to satisfy investors.
Thu, Jan. 23, 12:10 AM
Wed, Jan. 22, 5:35 PM
Wed, Jan. 22, 7:49 AM
- There is an air of caution with analysts over the pace of sales growth Starbucks (SBUX) will report for its FQ1.
- Sanford Bernstein analyst Sara Senatore isn't the only one expecting a slight deceleration from recent trends.
- Same-store sales in the U.S. could be a particular focus, with the general slowdown in retail traffic to stores and restaurants seen as likely to have encapsulated Starbucks as well.
- Starbucks reports tomorrow with analysts expecting EPS of $0.69 on revenue of $4.3B.
- SBUX -0.3% premarket and -5.2% over the last 5 trading sessions on earnings apprehension.
Thu, Jan. 16, 9:53 AM
- Starbucks (SBUX -0.3%) will need to tighten up the security of it mobile app after a researcher hacks his way rather easily into retrieving customer username and password information.
- The company made the rookie mistake of leaving data trails on the phone in plain text instead of in an encrypted file, but says it will make the fix.
- The vulnerability was first disclosed on a techie forum by Daniel Woods.
Tue, Jan. 14, 6:49 AM
- Belus Capital Advisers downgrades Starbucks (SBUX) to a Hold rating from Buy on concerns the company could stumble just a bit in 2014.
- Analyst Brian Sozzi thinks operational issues at stores have cropped up enough to cut into sales and efficiency.
- The firm slashes its price target on the company to $75 from $90.
Wed, Jan. 8, 3:26 PM
- Coffee prices continue to surge after torrential rains in Brazil threaten to damage as much as 40% of the nation's arabica crop.
- Arabica coffee futures for March delivery are up 3% on the day and 19% since early November, but still stand at a historically-low level.
- Premium coffee sellers such as Starbucks (SBUX +0.6%) and Green Mountain Coffee Roasters (GMCR +1.1%) favor the arabica bean.
- Related ETFs: JO
Mon, Jan. 6, 2:06 PM
- Hedgeye's Howard Penney has some strong feelings on which restaurant operators are managing themselves through the operational boom-and-bust cycles most chains endure as concepts are grown too fast.
- The research analyst thinks Starbucks (SBUX -1%) and Brinker International (EAT -1.1%) have honed in on a correct management strategy to trim capex spending and "attack" the middle of the P&L to improve EBITDA, while Darden Restaurants (DRI -2.3%) stubbornly resists the idea.
Fri, Jan. 3, 9:27 AM
- Starbucks (SBUX) introduces gift cards at some locations in China at a strategic time just in front of the Lunar New Year.
- In the U.S., the company has had rousing success with its gift card program as it has become the go-to gift for holiday season shoppers who tend to procrastinate or run out of ideas.
Thu, Jan. 2, 3:06 PM
- The National Restaurant Association's Restaurant Performance Index rose 0.2% M/M in November to hit a five-month of 101.2
- The research group also reported that 47% of restaurant operators saw customer traffic growth improve in November from the same period a year ago, up from the 43% which reported improvement in October.
- A majority of restaurant operators have a positive outlook on the industry and plan to spend money on capital expenditures in the next few months.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
SBUX vs. ETF Alternatives
Starbucks Corp is the roaster, marketer & retailer of specialty coffee in the world, operating in 65 countries. It sells a variety of coffee & tea products. It sells goods and services under brands under Teavana, Tazo, Seattle's Best Coffee, etc.
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