Starbucks Brews Earnings Gains (SBUX)

Douglas A. McIntyre

Starbucks Corp. (NASDAQ:SBUX) has shown its earnings, and the results came in at net $0.21 EPS on revenues of $2.4 Billion.  First Call estimates were $0.21 EPS and almost $2.4 Billion in revenues.  It is also maintaining $0.87 to $0.89 EPS guidance on 20% revenues, similar to before.

Introducing 2008 targets: It sees same store sales of 3% to 7%, is targeting 18% revenue growth and targets 20% to 22% earnings growth.  Fiscal September-2008 looks like estimates are $1.06 EPS on revenues of $11.33 Billion.  That is in-line on earnings guidance but could be deemed a tad light on the revenue front depending on your mid-point of guidance and which estimate you use.  The good news is that this is not showing any newer fundamental flaws or major problems that would create real caution inside the company.  Shares are acting accordingly in initial reactions, and we’ll have to see how others interpretthose earnings and revenue growth ranges before declaring a formal vistory.

Starbucks opened a record 668 stores in the quarter as well and posted a comparable sales growth per store of 4%.  It still sees a total of 2,400 store openings this year and is now targeting 2,600 store openings in 2008.

Starbucks shares are up almost 4% in initial after-hours reactionary trading at $28.25.  If that level can hold, shares will be well above 10% off of the recent lows and may give investors a reason to think the worst has been seen or that most of the bad news has been priced in.  We’ll see if that holds, but that’s the initial reaction.

Jon C. Ogg
August 1, 2007

Jon Ogg can be reached at; he does not own securities in the companies he covers.