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Starbucks Corporation Message Board

  • Agent_Felix_Leiter Agent_Felix_Leiter Jul 6, 1999 1:35 PM Flag

    Optimistic Analysis of SBUX

    We just posted this article on SBUX:

    Late
    last week Starbuck�s stock was pummeled 30% because
    the Street was angered by its new focus on a strategy
    for the internet. What? That just sounds weird
    doesn�t it? Unbelievably, it is indeed true.

    Our
    bottom line is that Starbucks (SBUX) is one of the
    world�s top brand names that SHOULD be using the internet
    to further leverage its brand name. The Street loved
    Starbuck�s expansion overseas. The Street loved its
    agreements with grocers to stock Starbucks products on
    supermarket shelves. We just don�t understand why the Street
    is taking such issue with its efforts to expand on
    the net. Various analysts last week charged that the
    company was moving away from its core business of selling
    coffee. NOTHING COULD BE FURTHER FROM THE TRUTH. By
    leveraging the power of the net to sell directly to its
    netizen customers, this company is making all the right
    moves to increase its profits, in our opinion.


    Starbuck�s core business continues to expand at a rapid
    pace. The company did announce an earnings per share
    shortfall of 54 cents from the 60 cents that the Street was
    expecting for 1999. This shortfall, however, was directly
    attributed to capital spending for its expansion on the
    internet. This is where the story becomes even more twisted
    in our minds. WHY IS THE STREET PUNISHING STARBUCKS
    FOR TAKING LOSSES ON CAPITAL SPENDING FOR INTERNET
    EXPANSION? It seems every internet company today is REWARDED
    by Wall Street for this type of �strategic
    thinking.�

    Repeat: the EPS shortfall is directly the result of its
    internet expansion�something that will increase profits in
    the future�and not a result of a slowdown in core
    business. Man, I love making money on stocks that fall 30%
    because of reasons like these.

    You don�t need to
    be a rocket scientist to buy a great company like
    Starbucks when its gets hammered for reasons like these.
    Particularly when the company continues to grow at a
    phenomenal pace. For the 26 weeks ended 3/28/99, net sales
    increased 27% to $781.5 million. Net income increased 28%
    to $44.7 million. Revenues reflected the opening of
    new retail stores and higher comparable store sales
    due to an increased number of transactions. Net
    income also reflected decreased interest expense due to
    the conversion of debentures, according to various
    SEC filings.

    Starbucks stock is now
    particularly attractive for long-term investors, especially
    after Thursday's slump. Its brand name is unparalleled
    in its industry. Starbucks P/E ratio is still above
    market norms even after the 30% decline in its stock
    price. However, its growth rate continues to justify a
    high P/E ratio, in our opinion. We fully expect to see
    Starbucks trading around 50 within 18 months. This is an
    excellent time to buy this great brand.

    If you like
    this analysis, find more at
    http://www.hoffmanasset.com. We're up 43% this year and buying great companies
    like SBUX cheap is why.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Actually I am an avid Starbucks fan and have been
      watching the stocks to decide whether or not to jump in -
      however, I also had decided to try to open one in my area
      and found out they didn't franchise. With probably 30
      in the metroplex area it doesn't matter where I stop
      - there is a line. I hope they decide to forego the
      "accessories" line and stick to what has been a sure thing -
      however, given other explosions in company expansions, I
      may end up eating my words. I have noted though in
      each of the stores I frequent I have yet to see anyone
      actually pick up one of the magazines.

    • You also told people to get in early yesterday and make $2 - $3 by lunch. No credibility.

    • What are you smoking? Long term ownership of a
      growing consumer monopoly is as safe an investment you
      will ever find in the market. If we ever see $19
      again, I'll buy even more. The nervous Nellys can switch
      to decaf.

    • a stock does not rebound within 2 days of a crash, it is doomed to wallow for a while before recovery.

    • This thing is gonna move a couple bucks in the morning. Watch it!! And buy eeln with your profits!!!

    • We just posted this article on SBUX:

      Late
      last week Starbuck�s stock was pummeled 30% because
      the Street was angered by its new focus on a strategy
      for the internet. What? That just sounds weird
      doesn�t it? Unbelievably, it is indeed true.

      Our
      bottom line is that Starbucks (SBUX) is one of the
      world�s top brand names that SHOULD be using the internet
      to further leverage its brand name. The Street loved
      Starbuck�s expansion overseas. The Street loved its
      agreements with grocers to stock Starbucks products on
      supermarket shelves. We just don�t understand why the Street
      is taking such issue with its efforts to expand on
      the net. Various analysts last week charged that the
      company was moving away from its core business of selling
      coffee. NOTHING COULD BE FURTHER FROM THE TRUTH. By
      leveraging the power of the net to sell directly to its
      netizen customers, this company is making all the right
      moves to increase its profits, in our opinion.


      Starbuck�s core business continues to expand at a rapid
      pace. The company did announce an earnings per share
      shortfall of 54 cents from the 60 cents that the Street was
      expecting for 1999. This shortfall, however, was directly
      attributed to capital spending for its expansion on the
      internet. This is where the story becomes even more twisted
      in our minds. WHY IS THE STREET PUNISHING STARBUCKS
      FOR TAKING LOSSES ON CAPITAL SPENDING FOR INTERNET
      EXPANSION? It seems every internet company today is REWARDED
      by Wall Street for this type of �strategic
      thinking.�

      Repeat: the EPS shortfall is directly the result of its
      internet expansion�something that will increase profits in
      the future�and not a result of a slowdown in core
      business. Man, I love making money on stocks that fall 30%
      because of reasons like these.

      You don�t need to
      be a rocket scientist to buy a great company like
      Starbucks when its gets hammered for reasons like these.
      Particularly when the company continues to grow at a
      phenomenal pace. For the 26 weeks ended 3/28/99, net sales
      increased 27% to $781.5 million. Net income increased 28%
      to $44.7 million. Revenues reflected the opening of
      new retail stores and higher comparable store sales
      due to an increased number of transactions. Net
      income also reflected decreased interest expense due to
      the conversion of debentures, according to various
      SEC filings.

      Starbucks stock is now
      particularly attractive for long-term investors, especially
      after Thursday's slump. Its brand name is unparalleled
      in its industry. Starbucks P/E ratio is still above
      market norms even after the 30% decline in its stock
      price. However, its growth rate continues to justify a
      high P/E ratio, in our opinion. We fully expect to see
      Starbucks trading around 50 within 18 months. This is an
      excellent time to buy this great brand.

      If you like
      this analysis, find more at
      http://www.hoffmanasset.com. We're up 43% this year and buying great companies
      like SBUX cheap is why.

    • it too. I think it is a great book. Helps me to
      understand how their minds work and why they do what they
      do. It don't mean he is right, helps to understand
      the mentality behind it all.

      I did not
      realize it till I read this book that Howard Schultz,
      lived a few blocks from me and went to the same
      highschool I went to but different years, I am younger. He
      even worked in a Luncheonette, I have eaten at many
      times. We could have crossed paths and never known
      it.

      All of this has nothing to do with my LONG and
      positive views of this company. Had stock before I read
      this book.

      I recommend Pour Your Heart Into It
      to anyone who wants to really understand SBUX and
      the mentality of the people behind it, like them or
      dislike them.

    • Got to wonder about people saying negetive things
      about SBUX, not being critical perhaps of their
      marketing plans or other future plans and being long with
      care about the company in mind.

      Why would
      anyone want to wish anyone bad fate? Wishing failure? Do
      you people who wish bad wish the death of individuals
      too and a future of poverty? What low lives. Wish bad
      wishers a happy life. What ever goes around comes around.

    • I have been reading "Pour Your Heart Into It" by
      Howard Schultz Chairman and CEO of Starbucks. He says,
      "franchising is almost a forbidden word at Starbucks. To me,
      franchisees are middlemen who would stand between us and our
      customers. We prefer to train all our own people and operate
      all our own stores, so that each cup of coffee you
      buy from Starbucks is the real
      thing."

      However, he goes on to say "to get into airports like
      O'Hare in Chicago, Starbucks had to sign a licensing
      agreement with Host Marriott." At first they experience
      some rocky times in the relationship. Mr Schultz said
      he was dissatisfied with what he saw and worked with
      Host Marriott to address the areas of concern. Now his
      opinion of licensing has improved, provided the right
      partner and the due diligence done beforehand is
      completed.

      The book points out that less than 10% of Starbucks
      are licensed, but the number of Airport locations is
      growing rapidly. Recently they signed a license agreement
      with Aramark for Starbucks on College
      campuses.

      So, they are doing some franchises, but working slow
      and with the right partners.

      Great book and
      Great company, I'm looking to jump into SBUX, hope this
      answers your question.

    • Anyone buying at this price level needs to have their head examined.

    • View More Messages
 
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