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Starbucks Corporation Message Board

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  • GrainbeltCorp GrainbeltCorp Aug 13, 2006 2:02 PM Flag

    look out below

    Using the recently released Q2 earnings, SBUX earned $125.5 million in Q2 '05 and if you back out the one time tax gain in '06, SBUX earned $137 million in Q2 '06. That is a whopping 9% growth in earnings for a company trading with a PE in the 40's, come on! Who in their right mind would put there hard earned investment dollars in this thing and expect to make money? There are lots of places to park your investment dollars, this one from the long side is a huge mistake.

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    • "There are lots of places to park your investment dollars, this one from the long side is a huge mistake."

      Yeah, I'd have to agree with you ...as far as parking money here. And I agree with most of your calclatin', but you do not take acct for the fact that recent comps do not benefit from any price increases (as future comps may), and recent comps are the first to recognize the smack from the generous option grants that SBUX longs so happily give to their mgmt. So the 9% earnings growth that you cite does not tell the whole story. What is so interesting is that the jihadist longs that post here are too clueless about their investment to challenge your numbers - - and it takes an unbiased nuetral person (me) to do so.

      • 1 Reply to spaticuss
      • Spaticuss, My calculatin' is totally, in this instance, backward looking. I just find it amazing that everyone is willing to take SBUX press releases at face value as far as earnings growth goes. As far as forward looking, SBUX is going to need alot of price increases to make up for slowing sales. Earning comparisons are going to be hard to keep up, on a per share basis, due to the dilution/cost of stock options. SBUX is not earning enough money to keep the buybacks at a level that will keep per/share earnings growing at a rate to justify it's multiple...without getting people to buy into semantics involving it's growth rate.

 
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