Will a Recent Event Affect Starbucks Stock?
With shares of Starbucks (NASDAQ:SBUX) trading around $80, is SBUX an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Starbucks is a roaster, marketer, and retailer of coffee operating worldwide. The company purchases and roasts the coffees it sells along with handcrafted tea and other beverages, and a variety of fresh food items through its stores. Starbucks sells a variety of coffee and tea products and licenses its trademarks through other channels such as stores and national food service accounts. In addition to its flagship Starbucks brand, the company’s portfolio features Tazo Tea, Seattle’s Best Coffee, Starbucks VIA Ready Brew, Starbucks Refreshers beverages, and the Verismo System by Starbucks. Starbucks has developed a solid reputation over the last several years, which has generated a lot of buzz for its products.
Starbucks posted third-quarter earnings after the closing bell Wednesday, and the stock has slumped after Starbucks gave underwhelming guidance and reported that sales in Asia were down. Net income came in at 63 cents per share, beating the average estimate of 60 cents per share. Starbucks has been aggressively expanding into China, but the company only saw sales rise in the country 8 percent during the quarter, a 1 percent drop from last quarter. Starbucks has recently been attacked by Chinese state media, which alleged that the company charges more for its products in China than in America in a deliberate attempt to take advantage of the Chinese people.