The holidays may be over, but that still doesn’t mean you can’t enjoy the taste of the season with nice warm drink. I still see plenty of people lining up at their local Starbucks shops to pick up holiday-themed drinks.
The latest buzz is that Starbucks Corporation (SBUX) is introducing a brand new drink called the Flat White American, based on the popular drink in Australia.
Let’s see what Starbucks’ prospects are for 2015.
Starbucks’ Company Overview
Starbucks is the coffee powerhouse that took the U.S. by storm, and Starbucks’ growth is now heating up around the world.
Starbucks has a presence in 65 countries and is seeing the largest growth in its global stores, especially in Asia-Pacific.
Starbucks also employs 191,000 full-time employees and has a dividend yield of 1.6%.
Starbucks’ Future Outlook and Earnings Buzz
Last month, Starbucks announced a massive five-year plan to double U.S. food sales to $4 billion, and to take advantage of opportunities in China and the Asia Pacific. SBUX expects revenues to reach $30 billion by 2019, a 46% increase over 2014 revenues.
For fiscal year 2015, Starbucks expects revenue growth to be between 16% and 18% and earnings in the range of $3.42 to $3.52 per share.
This quarter, analysts expect Starbucks to earn 80 cents per share on $4.8 billion in sales, representing 12.7% earnings growth and 13.2% sales growth. SBUX stock’s next earnings announcement will likely be released at the end of the month.
Starbucks’ Current Ratings
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. For much of the past year, SBUX stock has remained in “hold” territory. Since then, SBUX stock has made a recovery, as reflected by its B-rated Quantitative Grade.
Still, there’s work to be done on Starbucks’ fundamentals side. SBUX outright fails when it comes to earnings momentum and earns a D-grade for earnings surprises.
Meanwhile, SBUX stock earns mediocre C grades in sales growth, earnings growth, analyst earnings revisions and cash flow. Starbucks’ bright spots are operating margin growth and return on equity, both earning As. SBUX receives a C-rating for its Fundamental Grade.
As of this posting, I consider SBUX a B-rated “cautious buy.” While Starbucks’ buying pressure is solid, SBUX stock was only recently upgraded to a “buy” rating. I would take a closer look at Starbucks’ fundamentals before diving in.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
