Thinking that it's a Starbucks
Peet's net income increased 20% to $1.8 million, or $0.13 per share, while revenues increased 19.6% to $60.9 million and inventories burgeoned by 45%. Cash and marketable securities, meanwhile, decreased by more than half to $12.8 million.
Over at Caribou, net sales increased 9% to $62 million, with comparable coffeehouse net sales up 1%. But the company also reported a net loss of $8.5 million, or $0.44 per share, a far deeper loss than last year, when it reported a loss of $3.1 million, or $0.16 per share.
Investors looked more favorably on Peet's -- and with good reason. Caribou's wider net loss was attributed to closing 11 coffeehouses, as well as some of the usual suspects, including higher labor and dairy costs. My glance at its annual results since 2003 show me that this company hasn't turned a profit the entire time -- and it isn't expected to over the next couple of years, either. Ouch.
Many investors have been skeptical of Motley Fool Stock Advisor pick Starbucks lately, but what a night-and-day comparison with Caribou. Starbucks does face some higher costs at the moment, and while some pessimists fear that it's reaching saturation here in the U.S., it's still expanding profitably into new markets here and overseas, even if growth has become a tad slower. And while rivals such as McDonald's
If there's one thing that seems to permeate the world of coffee stocks, it's a premium price. Let's skip Caribou -- it obviously has a problem operating profitably. However, a quick glance at Peet's might give one pause. It's trading at about 56 times trailing earnings. Ahem. Starbucks has always been known for looking expensive, but at the moment, its price-to-earnings ratio is just 32. Starbucks' PEG ratio may not look like a screaming bargain at 1.38, but it looks a lot more reasonable than Peet's 2.30.
When it comes to coffeehouse stocks, I'm happy with my Starbucks, which at the moment is also pretty reasonably priced compared with some of its peers.