On May 3, Starbucks
- Patrons responded favorably when warm breakfast and lunch items hit store menus -- revenue for the quarter increased by 20% from 2006.
- Margins, on the other hand, slightly decreased across the board from the expansion of food and merchandise selections, which are higher-cost, lower-margin items.
- To continue international growth, the chain entered the Central European market by opening its first store in Bucharest, Romania.
- Starbucks is a two-star stock out of a possible five in the Motley Fool CAPS community, while rival coffeehouse Caribou Coffee
(NASDAQ:CBOU) earns only one star. McDonald's(NYSE:MCD) has recently made way into the latte market, and it ranks with three stars.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$2,255.6 |
$1,885.8 |
19.6% |
|
Net Profit |
$150.8 |
$127.3 |
18.5% |
|
EPS |
$0.19 |
$0.16 |
18.8% |
|
Diluted Shares |
774.1 |
794.6 |
(2.6%) |
Get back to basics with the income statement.
Margin Checkup
|
Q2 2007 |
Q2 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
58.1% |
59.7% |
(1.5) |
|
Operating Margin |
10.7% |
10.7% |
(0.0) |
|
Net Margin |
6.7% |
6.8% |
(0.1) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$343.8 |
$445.4 |
(22.8%) |
|
Accounts Rec. |
$240.8 |
$190.6 |
26.3% |
|
Inventory |
$578.9 |
$456.7 |
26.8% |
|
Liabilities |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$280.0 |
$230.7 |
21.3% |
|
Long-Term Debt |
$1.6 |
$2.5 |
(37.7%) |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
YTD 2007 |
YTD 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$737.8 |
$762.0 |
(3.2%) |
|
Capital Expenditures |
$507.2 |
$310.3 |
63.5% |
|
Free Cash Flow |
$230.6 |
$451.7 |
(48.9%) |
Free cash flow is a Fool's best friend.
Related Foolishness:
- Starbucks vs. Whole Foods: Starbucks
- Fool.com: Reading the Starbucks Coffee Leaves
- More Soul-Searching at Starbucks
Starbucks is a Stock Advisor recommendation. You can get in on the next hot stock pick from the Gardner brothers by signing up for a free 30-day trial.
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