Peet's Has a Half-Caf Quarter

For four consecutive quarters now, earnings at Peet's Coffee & Tea (Nasdaq: PEET) have been exactly in line with the Street's expectations. So it figures that Thursday's announcement of second-quarter earnings received little fanfare.

What's more, with Peet's trailing price-to-earnings ratio of 47 and the high-growth projections baked into the current price, merely meeting expectations isn't always enough to move the stock price forward. As a result, Peet's shares have fallen 12% over the past 52 weeks.

Here are some of the highlights from the earnings report:

• Net income was $1.8 million, up slightly from the second quarter of 2006.
• Sales came in at $60.1 million, up 21% over last year's figures.
• Quarterly earnings per share of $0.13 met analyst expectations.

On the bright side, grocery sales for Peet's products in stores such as Safeway (NYSE: SWY) and Whole Foods (Nasdaq: WFMI) rose 26.1% for the quarter. Increased national grocery-store exposure will certainly help build brand awareness, as will expansion of Peet's coffeehouses beyond California.

You gotta pay to play
Peet's isn't alone in its struggles to move the bottom line forward. Higher coffee and milk prices have hurt coffee purveyors across the country -- Starbucks (Nasdaq: SBUX) and Caribou Coffee (Nasdaq: CBOU) included.

Green Mountain Coffee Roasters (Nasdaq: GMCR), on the other hand, has at least been able to avoid the higher milk prices, since it doesn't operate stores that craft milk-based drinks such as lattes and cappuccinos. Over the past 52 weeks, Green Mountain shares have more than doubled.

That means investors in coffee stocks -- including Starbucks, Caribou, and yes, Peet's -- should pay especially close attention to milk prices, as well as how the management teams at those companies handle adverse commodity prices down the road.

For more smooth, slow-roasted goodness, check out:

• Starbucks, Have You Changed?
• Caribou's Still Grounded
• Waiter, There's Some Ice in My Coffee

Starbucks and Whole Foods are Motley Fool Stock Advisor picks. A free 30-day trial to the service is all yours.

Fool contributor Todd Wenning owns shares of Starbucks, but holds no financial position in any other stocks mentioned. He's still enjoying his bag of Peet's "holiday roast" from Christmas. The Fool's disclosure policy is all-natural.