Starbucks percs up: Stock jumps 4%January 25, 2013: 11:59 AM ET
Starbucks is enjoying a caffeine rush on Friday after the coffee king reported its latest quarterly results.
Shares of Starbucks (SBUX) were up 4% in late morning trading. The company announced Thursday afternoon that fiscal first-quarter sales jumped 11% from a year ago and hit a record of $3.8 billion. Earnings per share were up 14%.
Although these numbers simply met analysts' forecasts, many investors were clearly impressed to see the company continue to grow, particularly in international markets. Starbucks said same-store sales rose 11% in its China/Asia Pacific unit.
But can the stock keep brewing up strong returns? Shares now trade at about 26 times fiscal 2013 earnings estimates, a bit of a premium to rivals McDonald's (MCD) and Dunkin Brands (DNKN) as well as K-Cup "frenemy" (and David Einhorn short target) Green Mountain Coffee Roasters (GMCR). Still, many traders on StockTwits think Starbucks deserves to trade at a lofty price.
Great points. The international growth plans of Starbucks get most of the attention. But the company continues to dominate in the United States. And the stock has been on a tear since Schultz came back to lead Starbucks in 2008.
It's an amazing comeback for a company that just a few years ago was being accused of having saturated the market with stores on nearly every corner of most big cities and towns. It brings to mind the hilarious "Best in Show" scene about a husband and wife meeting at Starbucks ... but not the same Starbucks. "We saw each other at different Starbucks across the street from each other."
One of my CNNMoney colleagues wants some credit for Starbucks' success. And another trader points out that Starbucks may have replaced a certain tech company as Wall Street's latest darling "it" stock.
Catherine, follow the Peter Lynch "buy what you know" mantra. For a mere $52 more than the $5 you probably shelled out for that tasty beverage, you can buy a share of Starbucks stock!
I think that's a compliment. But Starbucks investors have to hope that the stock doesn't plunge 35% in a few months like the once invincible Apple (AAPL) has done. Speaking of Apple, it is interesting that Starbucks avoided a huge sell-off considering that its results did not blow past forecasts. But that's kind of like the whole market right now. Apple can apparently do nothing right and everybody else gets a free pass and the benefit of the doubt.
Finally, it's time for the Reader Comment of the Week. Apple was THE story. Lots of funny tweets about the huge sell-off following earnings. But here was my favorite. It was in response to my joke about how tissue makers Procter & Gamble (PG) and Kimberly-Clark (KMB) might benefit from increased sales to inconsolable Apple shareholders.