Starbucks Sees Record Revenue, but Reiterates Full-Year Guidance

Starbucks (Nasdaq: SBUX) reported earnings after the market closed on Thursday and it was a record-breaking quarter for them:

  • Record net revenues of $6.0 billion, up from $5.3 billion (14% increase year-over-year)
  • Net income rose to $660.1 million, up from $652.8 million (1.1% increase YOY)
  • Earnings of $0.47 per share, up from $0.45 per share (4.4% increase YOY)

If you’ll recall from earlier this week, I was primarily concerned with the performance of Starbucks’ food business, and unfortunately, the food business isn’t broken out specifically in the results. Instead, I will focus on the growth by segment, specifically how well Starbucks is growing outside of the “Americas,” which might be more important when looking at the long-term prospects of the company. Continue reading “Starbucks Sees Record Revenue, but Reiterates Full-Year Guidance”

What I Watch in My Stocks, Part 2

Note: This is a continuation of my post from yesterday. Feel free to go read the two introductory paragraphs there if you want to know the purpose of these posts!

Up first today are the four companies in my “War on Cash” basket, which is an idea that I I admit I’m stealing this idea from Jason Moser of The Motley Fool, who calls the “War on Cash” one of the more interesting developments in investing.

Mastercard Incorporated (NYSE: MA) [Earnings – May 2 Before Market Open (BMO] – For Mastercard, the word is CASH. Chances are, we are going to get further removed from using cash in our lives, so companies like Mastercard will benefit because it is their infrastructure that a cashless society will run. Mastercard is the second largest of the four companies, with $186.7B in market cap, $12.5B in revenue and $4.7B in income. This is the longest held of the four “War on Cash” companies that I own, and I plan on holding them for a while.

PayPal Holdings, Inc. (Nasdaq: PYPL) [Earnings – April 25 AMC] – PayPal joins Mastercard with the word CASH. A recent addition to the portfolio, I was simply rounding out the thesis behind the “War on Cash” basket mentioned above. PayPal was spun off from eBay a few years ago, and they have been successful in their own right since being granted its independence. It’s the third largest of the “War on Cash” companies, checking in with a market cap of $95.4B, annual revenue of $13.1B, and income of $1.98B. Continue reading “What I Watch in My Stocks, Part 2”

FR: Growth Ahead for Dunkin’ Brands?

Article: Growth Ahead for Dunkin’ Brands?

The next article in my “Fool Revisited” series was prompted by the news that Dunkin’ Brands (Nasdaq: DNKN) had filed for an IPO and was going public. As indicated in the lede of the article, I had grown to appreciate Dunkin’ Donuts after living in Connecticut for 10 years, and after not being much of a coffee drinker growing up, learned to value the cheap and usually unburnt coffee on my way to (and sometimes from) work every day. Besides, it’s almost illegal to live in New England and not drink DD, so I had to adapt before they through me in jail or something.

At the time, Dunkin’ Brands was mainly confined to the states east of the Mississippi River – though it did have a presence elsewhere due to its ownership of Baskin-Robbins. It also uses a primarily franchise-driven model, with the majority of its stores owned by franchisees, which shifts a lot of the revenue to franchise fees and the like. This is different than Starbucks (Nasdaq: SBUX), for example, which owns the majority of its stores and derives the bulk of its revenue from the actual coffee/goodies it sells.

Must have felt like the world needed to see this article, so here’s the ancient tweet announcing its arrival:

Dunkin’ Brands did do better than the S&P 500, but Starbucks blew both out of the water. Granted, Starbucks was also starting from a position of power and wasn’t overcoming some of the new struggles that new public companies face, unlike Dunkin’ Brands at the time. Nevertheless, and investor would have been rewarded for sticking around through some of the early rough stretches. Using the compound annual growth rate (CAGR) and total growth, here’s how Dunkin’ Brands (and Starbucks) fared versus the S&P 500 from article publication (September 29, 2011) through January 12, 2018:

Stock Start Price End Price CAGR Total Growth Value of $10,000
Dunkin’ Brands $24.66 $64.39 16.48% 161.11% $26,111
Starbucks $17.33 $60.40 21.94% 248.53% $34,853
S&P 500 $1,160.40 $2,786.24 14.93% 140.11% $24,011

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

When Dunkin’ Brands went public, they used a lot of the proceeds to pay off debt and reward its previous owners. Since then, as noted above, the stock has been a pretty solid performer, even introducing a dividend early in 2017. I’m personally more partial to Starbucks as an investment, but if Dunkin’ Brands can continue to show that it can compete as both a company and a stock, I could be interested in the future.

Until next time…

Disclaimer: I do not personally own shares of either company mentioned here, but I have purchased and currently own shares of Starbucks within my mother’s investment portfolio which I manage. However, I have no plans to purchase shares of either company within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.