Starbucks (NASDAQ:SBUX) delivered strong results last week on the back of strong revenue growth. The company changed its reporting format from this quarter to include the results of China & Asia Pacific (CAP), Americas and Europe, Russia, Middle East and Africa (EMEA) separately. Total revenue grew by 16% to $3.44 billion, compared to the same quarter previous year. Revenue growth was partially helped by the addition of Evolution Fresh and the conversion of some of the outlets in Europe which were running as joint ventures to company-owned outlets and recognizing full revenue from packaged coffee and tea sales under the direct distribution model. The company posted a net income of $382 million or 50 cents a share up more than 10%. Starbucks’ competitors in the broader market for coffee include McDonald’s (NYSE:MCD), Caribou Coffee (NASDAQ:CBOU) and Dunkin’ Brands (NASDAQ:DNKN).
Articles for Starbucks
Starbucks Brews Up Impressive Earnings But Falling Margins a Worry
Graph ItNEW!Wednesday, February 1st, 2012 by Trefis Team
Starbucks Expands into the Land of Tea
Graph ItNEW!Friday, January 27th, 2012 by Trefis Team
If there has been one recurring theme in my investment recommendations over the past two years, it is this: If you want growth, you have to look to emerging markets. With the United States, Europe and Japan burdened with high levels of debt and aging demographics, growth in the developed world will be hard to come by. But in markets like China, Brazil and Turkey, living standards are rising and a new middle class is rising. This is a long-term investment theme that is ripe for the picking.
Starbucks Earning Preview: What We Are Watching
Graph ItNEW!Friday, January 20th, 2012 by Trefis Team
Starbucks (NASDAQ:SBUX) will announce its Q1 earnings January 26. It has altered its reporting format and will be reporting results separately for China and Asia Pacific (CAP), Americas region and Europe, Russia, Middle East and Africa (EMEA). The stock gained close to 10% last quarter alone. Starbucks’ competitors in the broader market for coffee include McDonald’s (NYSE:MCD), Caribou Coffee (NASDAQ:CBOU) and Dunkin’ Brands (NASDAQ:DNKN). We feel that the current rally is fueled by its recent record of better-than-expected results, but we think the stock is fundamentally extended. Let’s look at a couple of factors which can potentially put the company in a precarious position.
Our price estimate for Starbucks is about $40, which is about 15% below the current market price.
Don’t Get Excited About Starbucks Rushing Into India Just Yet
Graph ItNEW!Thursday, January 12th, 2012 by Trefis Team
The Indian government finally allowed 100% FDI in a single retail brand which could see Starbucks entering the country soon. Earlier in 2011, Starbucks (NASDAQ:SBUX) had signed a Memorandum of Understanding (MoU) with India’s Tata Coffee Ltd to source coffee beans and consider opening stores in the country. Until now, only 51% ownership in single brand retail was allowed which meant that any foreign company looking to invest would have to form a joint venture with an Indian company. Starbucks’ competitors in the broader market for coffee include McDonald’s (NYSE:MCD), Caribou Coffee (NASDAQ:CBOU) and Dunkin’ Brands (NASDAQ:DNKN).
Uncertainty Looms Over Starbucks’ Expansion and Diversification Plans
Graph ItNEW!Monday, December 26th, 2011 by Trefis Team
Starbucks (NASDAQ:SBUX) has diversified to more than just coffee with the recent acquisition of Evolution Fresh Juice and the introduction of wine and beer in various outlets. In fact, Starbucks even changed the logo to drop the words ‘Starbucks Coffee’ to highlight that diversification. At the same time the company is expanding rapidly, especially in emerging markets like China, and recently revealed its plan to open up 300 outlets in the U.K. over the next 5 years. However, all of these opportunities also present a fair amount of challenges and could potentially cause hiccups in the growth trajectory of the company. Starbucks’ competitors in the broader market for coffee include McDonald’s (NYSE:MCD), Caribou Coffee (NASDAQ:CBOU) and Dunkin’ Brands (NASDAQ:DNKN).
McDonald’s, Starbucks Jump on Board Chipotle’s Green Machine
Graph ItNEW!Friday, December 16th, 2011 by Trefis Team
Restaurant chains like Chipotle (NYSE:CMG), McDonald’s (NYSE:MCD) and Starbucks (NASDAQ:SBUX) are trying to be more green to win the hearts and minds of customers by sourcing natural ingredients and promoting recyclability. Such moves will increasingly have a greater impact going forward as the regulations are bound to get tougher. Moreover, these restaurants are likely to get future tax benefits as well. While these moves are unlikely to save on costs in the near term, they could pay off longer term as the input costs have soared for many restaurants. More importantly, an improved image in the eyes of the customers could be the ultimate pay off.
Starbucks’ Stock Looks Full at $40
Graph ItNEW!Friday, December 16th, 2011 by Trefis Team
Starbucks (NASDAQ:SBUX) has been an investor favorite this year delivering 35% year to date gains, but now with the stock around $44, Starbucks’ valuation looks full in our view. Investors who are hoping for better-than-expected results each quarter might be disappointed as the mitigating factors such as spiraling coffee prices could overshadow the company’s growth. Starbucks’ competitors in the broader market for specialty coffee include McDonald’s (NYSE:MCD), Caribou Coffee (NASDAQ:CBOU) and Peet’s Coffee (NASDAQ:PEET).
Can Chipotle, McDonald’s Repeat its Stellar Gains in 2012 ?
Graph ItNEW!Monday, December 12th, 2011 by Trefis Team
So 2011 has been a wonderful year for restaurant stocks. The year-to-date gains for McDonald’s (NYSE:MCD), Yum! (NYSE:YUM), Starbucks (NASDAQ:SBUX) have been more than 25%, 15% and 30% respectively. For Chipotle (NYSE:CMG), it is a staggering 60%. The S&P 500 Index, on the other hand, is more or less at the same level where it was at the beginning of the year. In spite of the recessionary fears, restaurant stocks have been able to deliver a stellar performance.
Restaurant Stocks: Chipotle, Stabucks & McDonald’s Sales Show Holiday Cheer
Graph ItNEW!Friday, December 2nd, 2011 by Trefis Team
Last week’s combo of Thanksgiving and Black Friday saw restaurants posting better than expected sales. According to First Data, the restaurant and establishment sales for Nov 24-25 paid for by credit or debit card increased by an impressive 11.7% from a year earlier. This week saw some of restaurant stocks posting healthy gains. Chipotle (NYSE:CMG), which closed at $301 last Friday, gained almost 10% through Thursday close.
Starbucks (NASDAQ:SBUX) also found support this week. We believe that Starbucks will have a hard time expanding internationally in countries like China and Vietnam due to its higher pricing. It will either have to expand at a very slow rate or reduce the prices. Reducing prices could have an adverse effect on its EBITDA margins, especially due to high costs of commodities.
You can read more on it in our earlier article, Starbucks Could be Too Expensive for Chinese Tastes.
See our complete analysis for SBUX stock here
McDonald’s (NYSE:MCD) had a mixed week. Although it rose some through Thursday, it under-performed the markets. However, we believe that the current market price is in line with the long term intrinsic value of the company.
See our complete analysis for MCD stock here
Positive Outlook
The restaurant industry is expected to perform well in the year ahead. The Restaurant Performance Index, which measures the overall health and outlook of the U.S. restaurant industry, was 100.1 in the month of September, up 0.7% from August. Restaurants have also been successfully been able to pass on higher commodity costs to consumers and enjoyed higher same-store sales this year. The trend is likely to continue next year as well. Moreover, the Consumer Confidence Index(CCI), released this week, was at its highest level since April 2003. So, we can expect a good year ahead for the restaurant industry.
Understand How a Company’s Products Impact its Stock Price at Trefis
Investors Mixed on Starbucks’ Bet on Juice Maker
Graph ItNEW!Monday, November 28th, 2011 by Trefis Team
Starbucks (NASDAQ:SBUX) is looking to increase the strength of its company-owned stores and packaged coffee divisions. Starbucks recently purchased Evolution Fresh, a company started by the founder of PepsiCo’s (NYSE:PEP) Naked Juice, for $30 million. Retail juice bars may be opening up as soon as next year featuring a super-premium juice offering. Starbucks hopes to strengthen the company-owned store revenues that drive nearly 50% of the Starbucks stock price according to Trefis estimates. However, some analysts worry that this move may be too far outside of Starbucks’ expertise to execute well. Read More »
Starbucks : All Articles
- Week of 2012-01-29
- Week of 2012-01-22
- Week of 2012-01-15
- Week of 2012-01-08
- Week of 2011-12-25
- Week of 2011-12-11
- 12/16/11 McDonald’s, Starbucks Jump on Board Chipotle’s Green Machine
- 12/16/11 Starbucks’ Stock Looks Full at $40
- 12/12/11 Can Chipotle, McDonald’s Repeat its Stellar Gains in 2012 ?
- Week of 2011-11-27
- 12/02/11 Restaurant Stocks: Chipotle, Stabucks & McDonald’s Sales Show Holiday Cheer
- 11/28/11 Investors Mixed on Starbucks’ Bet on Juice Maker
- 11/28/11 Starbucks Could be Too Expensive for Chinese Tastes
- Week of 2011-11-13
- Week of 2011-11-06
- 11/11/11 Starbucks Doubles Down on Growth After Solid Results
- 11/10/11 Starbucks Goes Blonde to Attract Light Coffee Drinkers
- Week of 2011-10-16
- Week of 2011-10-09
- Week of 2011-09-25
- Week of 2011-09-11
- Week of 2011-08-28
- Week of 2011-07-10
- Week of 2011-05-08
- Week of 2011-04-03
- Week of 2011-03-27
- 03/30/11 McDonald’s Invests in Russian Growth as Part of EM Focus
- 03/30/11 Starbucks Gains from Selling Packaged Coffee for Keurig Machines
- 03/29/11 Downside to Starbucks from Increasing Packaged Coffee Prices
- Week of 2011-03-20
- Week of 2011-03-06
- Week of 2011-02-27
- Week of 2011-02-13
- Week of 2011-01-30
- Week of 2011-01-23
- Week of 2011-01-16
- Week of 2011-01-02
- Week of 2010-12-05
- 12/08/10 Can McDonald’s Stock Gain From Healthy Food Initiatives?
- 12/08/10 Kraft’s Starbucks Partnership – Limited Impact on Kraft Stock
- 12/06/10 Starbucks’ Investor Day Sheds Light on Growth Plans
- Week of 2010-11-28
- 12/01/10 Starbucks Packaged Coffee & Tea Revenues Rising
- 11/30/10 McDonald’s US Promotions, China Expansion to Help Sales
- Week of 2010-11-21
- Week of 2010-11-14
- Week of 2010-10-17
- Week of 2010-09-19
- Week of 2010-08-22
- Week of 2010-08-08
- 08/11/10 Expectations for McDonald’s Stock In Line with Trefis Forecasts
- 08/10/10 Partner Sales Key To Starbucks’ Growth
- Week of 2010-07-25
- Week of 2010-07-18
- Week of 2010-06-20
- 06/23/10 Starbucks Lures Back Old Customers with Free Wi-Fi, WSJ and iTunes Access
- 06/21/10 How important are company owned stores to McDonald’s stock ?
- Week of 2010-06-06