One of our Stock Market Madness quarterfinals finds the king of coffee, Starbucks Corporation (NASDAQ:SBUX), matched up against America’s most trusted brand, Procter & Gamble (NYSE:PG).
In the second round, Starbucks knocked off The Coca-Cola Co (NYSE:KO) by a substantial margin while Procter & Gamble just sneaked past Nike Inc (NYSE:NKE).
Last round, we looked at the individual businesses, how they have branded themselves, who they are selling to and what the competition and growth prospects looked like tin their particular industries.
In the quarterfinals, we’ll take a look at the numbers to decide which company can provide more to investors moving forward — and therefor who should move into the final four.
Starbucks (SBUX)
Sales have been trending higher for Starbucks, and looking at the numbers, it’s clear that analysts are expecting much of the same over the next couple of years.
| Current-quarter sales estimate (March ’15) | Next-quarter sales estimate (June ’15) | Current-year sales estimate (Year ended Sept. ’15) | Next-year sales estimate (Year ended Sept. ’16) | |
| $4.52 billion | $4.84 billion | $19.06 billion | $21.26 billion | |
| Year-ago sales (actual) | $3.87 billion | $4.15 billion | $16.45 billion | $19.06 billion (’15 estimate) |
In addition to rising sales, Starbucks also has been showing promising earnings growth, which analysts also believe will continue heading higher, as shown in the table below.
| Current-quarter earnings estimate (March ’15) | Next-quarter earnings estimate (June ’15) | Current-year earnings estimate (Year ended Sept. ’15) | Next-year earnings estimate (Year ended Sept. ’16) | |
| 65 cents/share | 80 cents/share | $3.13/share | $3.69/share | |
| Year-ago earnings (actual) | 56 cents/share | 67 cents/share | $2.68/share | $3.13/share (’15 estimate) |
With Starbucks expanding its edible options and exploring delivery, there is really no reason to believe the estimates of increased sales and earnings will not become a reality in the near future.
Procter & Gamble (PG)
While Starbucks shows promise and growth for the future, Procter & Gamble is showing action in the other direction:
| Current-quarter sales estimate (March ’15) | Next-quarter sales estimate (June ’15) | Current-year sales estimate (Year ended Sept. ’15) | Next-year sales estimate (Year ended Sept. ’16) | |
| $18.55 billion | $18.79 billion | $77.60 billion | $78.20 billion | |
| Year-ago sales (Actual) | $20.56 billion | $20.16 billion | $83.06 billion | $77.60 billion (2015 Estimate) |
Earnings are a bit more mixed.
| Current-quarter earnings estimate (March ’15) | Next-quarter earnings estimate (June ’15) | Current-year earnings estimate (Year ended Sept. ’15) | Next-year earnings estimate (Year ended Sept. ’16) | |
| 94 cents/share | 97 cents/share | $4.01/share | $4.32/share | |
| Year-ago earnings (Actual) | $1 per share | 93 cents/share | $4.09/share | $4.01/share (2015 estimate) |
This downward trend is one reason why Procter & Gamble announced it would be selling some of its brands in an attempt to reduce its overall size.
Most people believe that bigger is always better, but in business, there is a point at which bigger ceases being better. And P&G might be at that point.
Yes, P&G’s size gives it the stability and dependability that some investors need to sleep soundly at night, but with the safety PG brings, you also sacrifice growth.
Our Quarterfinal Pick: SBUX
The matchup is pretty clearly cut as one that pits growth vs. security. If you’re a younger investor who has time on your side, then growth is your likely choice — in which case you’re siding with SBUX. If you’re close to or already in retirement, P&G should get your vote.
Both organizations are good investments, but this is a competition. My vote is SBUX to head to the final four.
Head back to the Stock Market Madness bracket to vote for your favorite stocks and check out other previews!
As of this writing, Matt Thalman was long PG and SBUX. You can follow him on Twitter at @mthalman5513.
