Starbucks Raises Guidance

Starbucks (SBUX) continues to do well with its business restructuring. The company had run into a lot of trouble. For five straight quarters, Starbucks experienced declining year-over-year earnings, which was unthinkable just a few years ago. They over-expanded and soon found their business suffering. Starbucks has cut costs by $580 million this year and they’ve shuttered around 900 stores. The new strategy seems to be working.

The coffee-shop outfit just reported earnings of 24 cents a share which was three cents more than estimates. Even better news is that the company raised guidance for next year. Earlier they had said to expect EPS growth of 13% to 18%. Now they say it will be 20% which translates to full-year 2010 EPS of 96 cents. Going by today’s close, that’s 20.5 times forward earnings (the shares are up some after-hours). This is very good news and I rate Starbucks a Buy.

In the coffee sector, we’re still celebrating Peet’s (PEET) buyout offer for Deidrich Coffee (DDRX). Next week, we can look forward to earnings from Green Mountain Coffee (GMCR).

More Louis Navellier

Twitter

Facebook

RSS Feed

Little Book

InvestorPlace Network

InvestorPlace.com