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  • logan_chrs logan_chrs Aug 13, 2006 1:44 PM Flag

    look out below

    that is one of the worst pieces of financial analysis i've ever read. "assuming the p/e multiple stays the same"....that's a pretty big assumption!! why should it stay the same??! interest rates have risen and are rising, growth prospects are looking worse than they were 6 months ago given recent results. margins are falling. SSS growth is slowing. "even with a 50% error you're still up 10%"??...50% error in what? p/e multiple? eps estimate? he is suggesting there is a big margin of safety in his calculations and he is wrong. there is no margin of safety that big in virtually any equity valuation, let alone a stock on a multiple of nearly 35x. if it disappoints on that rating, u may get eps contraction but you will definitely continue to get multiple contraction which hurts equity investors a lot more.

    Its also not just oil and interest rates hurting this company on the revenue line imho, its also increasing competition from other franchise food/beverage outlets.

    make up your own mind on this stock, but following this journalist because of that analysis is hugely risky in my view.

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    • Yes, I have to agree, as I'd like to paint a rosey scenerio for consumer stocks but when you see what is going on. The middle east war which is as heated up as it ever has been, the free world's breeding of Muslim terrorists that freely board our trains and planes and are planning more attacks as I type.
      You've got about 5% you can get risk free in a good short term money fund. Hey, pay pal is there at that! Shooting the dice for 10% when you have 5% at no risk lends more support for sideline funds. Yes, blood in the streets may come. SBUX may get to $22 a share and then, maybe consider a position. Maybe after an attack somewhere. SBUX has so much geopolitical risk in the world, so much exposure. Why would anyone buy a stock which is still even down from $39 a fluffball as to p/e and with the SSS comps slowly slip sliding A-way.....

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