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.
Hedge fund manager David Einhorn's newest short target: Chipotle Mexican Grill (CMG).
Greenlight Capital's Einhorn thinks Taco Bell, owned by Yum Brands (YUM), will eat Chipotle's lunch with its new Cantina-style menu.
Chipotle was one of four stocks that Einhorn discussed during his presentation at the Value Investing Congress in New York. He also spelled out a case for why investors should buy General Motors (GM) and health insurer Cigna (CI). MOREMaureen Farrell - Oct 2, 2012 12:56 PM ET
Green Mountain Coffee Roasters (GMCR) issued some decaf guidance. But that didn't matter to investors. Shares popped nearly 30% Thursday morning even though the company provided a near-term earnings outlook Wednesday that was less than stellar. It appears investors are excited to hear that the company is boosting its inventory ahead of what it hopes will be strong demand next year.
That's dangerous. Many companies have been burned by boosting inventory MOREPaul R. La Monica - Aug 2, 2012 10:41 AM ET
Starbucks is cooling off ... for now.
The Seattle-based coffee chain trimmed its earnings forecast by about 2 cents a share Tuesday, but there's no need to panic. It's not like Starbucks is going to report a loss.
Last year's high coffee prices, Europe's nagging debt problems and the company's baking plans will cut into Starbucks' bottom line this year, said chief financial officer Troy Alstead, at the annual stock conference of MORECatherine Tymkiw - Jun 12, 2012 3:39 PM ET
Traders debate whether the Starbucks (SBUX) Bay Bread/La Boulange buy is a half-baked idea. And Netflix (NFLX) decides to show some backbone.
JeffReevesIP: I just don't get the $SBUX bakery move. Yes, some Starbucks coffee drinkers may buy a pastry too. But is that the extent of the "plan?"
JeffReevesIP: Bigger issue: I ADORE coffee but more & more don't - esp younger energy drink crowd. Yes $SBUX must rethink "cafe" menu MOREPaul R. La Monica - Jun 5, 2012 2:00 PM ET
#StupidStock Move of the Day! Was tempted to go $SBUX but yesterday's rally equally dumb. Still, $PNRA flat? Shouldn't Panera be nervous?— Paul R. La Monica (@LaMonicaBuzz) June 05, 2012
Starbucks (SBUX) is getting into the bread business. While the $100 million purchase of La Boulange Bakery in San Francisco is a relatively small deal for the king of coffee, I am a little surprised Panera (PNRA) investors aren't more worried MOREPaul R. La Monica - Jun 5, 2012 1:02 PM ET
Starbucks is getting into the bread business.
The Seattle-based coffee chain announced plans Monday to buy San Francisco-based Bay Bread and its La Boulange bakery brand for $100 million.
"This is an investment in our core business," said Howard Schultz, Starbucks chief executive, in a conference call with financial analysts. "After more than 40 years, we will be able to say that we are bakers too."
Schultz said one-third of Starbucks transactions include MOREBen Rooney - Jun 4, 2012 5:21 PM ET
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