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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, Oct. 30, 4:22 PM
- FQ4 non-GAAP operating income of $857.3M up 28% Y/Y. Non-GAAP operating income per share of $0.74 up 23%.
- Global comp store sales up 5%. Non-GAAP operating margin of 20.5% up 280 basis points.
- New net stores of 503, bringing total to 21,366.
- Quarterly dividend is hiked 23% to $0.32 per share. Annualized yield of 1.66%.
- Fiscal 2015 targets: Revenue growth of 16-18% expected, including over $1B in incremental revenue from planned purchase of Starbucks Japan. Said purchase should be mildly dilutive to GAAP operating margin; non-GAAP operating margin expected to be flat to slightly up. Non-GAAP EPS expected in range of $3.08-$3.13 (vs. $2.66 in FY2014). Q1 non-GAAP EPS expected at $0.79-$0.81. New store opening should net 1,650.
- Conference call at 5 ET
- Previously: Starbucks EPS in-line, misses on revenue
- SBUX -4.8% AH
Thu, Oct. 30, 4:05 PM
Fri, Jul. 25, 11:50 AM
- "With a top and bottom line beat in a difficult consumer landscape, FQ3 lived up to the lofty expectations," says UBS's Keith Siegner (who has a Buy and $90 PT). Nevertheless. some pressure on the all-time high shares could be warranted amid management commentary (CC transcript) that FY15 earnings growth could be at the lower end of the 15-20% range. "We're not phased," he concludes, and would buy on any weakness.
- Also noting the conservative guidance, Barclays' Jeffrey Bernstein (Equal Weight and $81 PT), says the stock - at 25x forward earnings - is fairly valued.
- "Strong momentum in the business continues to make Starbucks (SBUX -2.3%) a long-term holding," says JPMorgan's John Ivankoe (Overweight and $85 PT). "While we believe some consolidation may be warranted to more aggressively purchase shares, we continue to advocate long-term investment based on uncommonly high cash flow/balance sheet flexibility, earnings power and visibility over the next few years."
- Previously: Starbucks edges lower following earnings beat
Thu, Jul. 24, 4:17 PM
- Comparable store sales globally up 6%, up 7% in the U.S. (vs. 5.1% expected), up 3% in EMEA (3.5% expected), up 7% in China/Asia-Pacific (7.1% expected).
- Operating income of $769M up 25%; operating margin up 200 bps to 18.5%.
- 344 new stores opened globally brings quarter-end count to 20,863 stores over 64 countries.
- Updated fiscal14 targets: Operating margin improvement targeted at 200 bps over 2013; adjusted EPS in range of $2.65-$2.67, with adjusted Q4 EPS expected at $0.73-$0.75. Net new stores expected at about 1,550 with Americas new stores boosted to 650 from 600.
- Fiscal 15 targets introduced: Revenue growth of at least 10%; global comp store sales growth in mid-single digits; an additional 1.6K new stores globally; EPS growth of 15-20%.
- Conference call at 5 ET
- Previously: Starbucks beats by $0.01, beats on revenue
- SBUX active AH, and currently down 0.6%.
Thu, Jul. 24, 4:08 PM
Thu, Apr. 24, 4:24 PM
- Starbucks (SBUX) reports global comparable store sales increased 6% in FQ2 vs. 5% in FQ1 and 6% for the year-ago period.
- Comp growth was fairly consistent across regions: Americas and U.S. +6%; EMEA +6%; China/Asia Pacific +7%.
- Operating margin improved 130 bps to 16.6% on sales leverage gains and lower commodity costs (coffee was hedged).
- The company added 335 net new stores during the quarter.
- FY14 EPS guidance is increased to $2.62-$2.68.
- SBUX +0.9% AH
Thu, Apr. 24, 4:07 PM| Comment!
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, 12:10 AM
Wed, Jan. 22, 5:35 PM
Oct. 30, 2013, 4:22 PM
- Starbucks (SBUX) shares are down 1.7% AH following a slight FQ4 beat.
- Global comparable store sales grew 7% on a 5% increase in traffic: Americas comps +7%, EMEA 0%, China/Asia Pacific +8%. The company opened 1.7K new stores in FY2013, ending the year with 19.8K stores. It expects to open 1.5K stores in the coming fiscal year.
- Operating margin expanded 1.5% Y/Y to 16.5%
- Management reaffirms FY2014 guidance: revenue growth of 10% or greater (previously 10%-13%), global comps in the "mid single digits," operating margin improvement of 1.5%-2%, and EPS of $2.55-$2.65 (vs. consensus of $2.67). FQ1 EPS is seen at $0.67-$0.69 ($0.69), FQ2 at $0.54-$0.55.
- PR, conference call at 5pm ET
Oct. 30, 2013, 4:05 PM
Jul. 25, 2013, 4:30 PMMore on Starbucks' (SBUX) FQ3: The company reported broad sales gains across regions with comparable store sales rising 8% to easily beat its 5.6% pace from a year ago. By region, China/Asia Pacific stood out with the rate of traffic growth doubling Q/Q. Customers remained loyal, pre-loading cards faster than ever and absorbing price hikes. Starbucks opened 341 net new stores during the period. The news is just as rosy for FY14, with Starbucks forecasting double-digit revenue growth and operating margin improvement of approximately 150-200 bps over FY13. Shares +6.1% AH to $72.35 - a higher level than they have ever closed at. | 1 Comment
Jul. 25, 2013, 4:18 PM
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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