My Life as a Frappuccino

I miss the days when a Starbucks (Nasdaq: SBUX  ) earnings report was so hot that you had to hold it using a pair of recycled coffee cups. These days, a Starbucks quarter is a lot like a Frappuccino: It's still refreshing, but cold to the touch.

There's nothing wrong with last night's fiscal second-quarter financials at the java-brewing giant. Revenue climbed 20% higher to $2.3 billion, on the strength of a 3% boost in comps and 1,042 new company-owned locations opening over the past year.

Earnings kept pace, climbing 19% to hit $0.19 per share. Factors tugged slightly in different directions, with store operating expenses growing slower than the top line as the pesky cost of sales ate up those savings. The end result: Operating margins slipped slightly for the second quarter in a row.

That's not necessarily worrisome. It was good enough to find Starbucks matching Wall Street expectations of $0.19 per share in profitability on $2.3 billion in revenue. However, this is the third quarter in a row in which Starbucks has simply matched analyst estimates.

It could be worse. Caribou (Nasdaq: CBOU  ) won't be posting a profit until 2009 at the earliest. Peet's Coffee (Nasdaq: PEET  ) has missed Wall Street's profit targets in two of the last three quarters. However, we're supposed to hold Starbucks to a higher standard. It's looking to earn between $0.87 a share and $0.89 a share this year, pricing the company at a lofty 35 times forward earnings.

Investors aren't buying into Starbucks for ordinary results. Sure, certain catalysts out there may pick things up. The company continues to make headway overseas, growing international sales by 32% this past quarter. The company's also test-installing TurboChef (Nasdaq: OVEN  ) high-speed ovens, in a move to expand its menu with warm sandwiches and baked goods.

Let's hope some of these initiatives work. Let's hope that they help make Starbucks less predictable and ordinary. Next time I order a Frappuccino, let it go through a TurboChef oven first.

Starbucks is an active recommendation for readers of the Motley Fool Stock Advisor newsletter service.

Longtime Fool contributor Rick Munarriz can actually walk to two Starbucks from his home, but he's still not much of a coffee sipper. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.