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Starbucks Corporation Message Board

  • RGanatra RGanatra Jan 6, 1998 7:33 PM Flag

    What's happening to SBUX?

    Around Christmas time - it seemed like SBUX was hanging in there pretty strongly at $39. It has been drifting lower ever since. Today, it dropped even more on supposedly good news (increased same store sales).

    Does anyone have some thoughts on why this is happening?

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    • The news was not good. Sales growth is slowing approximately 14 percent in qone quarter (from 38 percent in 4Q97 to 33 percent in 1Q98).

      The stock has been in a trading range, primarily from $26 to $40 with a brief rise to $44 late last year, since August 1996. It will likely continue to trade in this range (which represents approximately a P/E range from 27 to 41) until they miss their estimated earnings for a quarter. The likeliness of a weak quarter is greatest in 2Q98 which their weakest sales quarter. Estimated earnings are $0.17 or a 42 percent increase from 2Q97.

      The stock may continue to trade in its range until 2Q98 is reported, currently the report date the week of April 23.

      Good luck.

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