A Lukewarm Cup O' Starbucks: Fool by Numbers

On Jan. 30, Starbucks (Nasdaq: SBUX  ) released first-quarter 2008 earnings for the period ended Dec. 30, 2007.

  • Starbucks opened 484 net new stores domestically this quarter, and 261 abroad. With revised store opening plans aiming for 1,175 U.S. openings and 975 internationals this year, you should expect fewer new locations at home while international expansion continues apace.
  • If not for a generous share buyback program, financed by a combination of fresh cash and not-too-stale debt, the earnings-per-share growth would have stalled entirely.
  • On the bright side, a slower build-out schedule will mean swifter cash flow growth over the next few quarters. You have to take the bad with the good sometimes.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2008

Q1 2007

Change

Sales

$2,768

$2,356

17.5%

Net Profit

$208

$205

1.5%

EPS

$0.28

$0.26

7.7%

Diluted Shares

744.9

782.8

(4.8%)

Get back to basics with the income statement.

Margin Checkup

Q1 2008

Q1 2007

Change*

Gross Margin

57.2%

58.2%

(1.0)

Operating Margin

12.0%

13.6%

(1.5)

Net Margin

7.5%

8.7%

(1.2)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2008

Q1 2007

Change

Cash + ST Invest.

$463

$374

23.6%

Accounts Rec.

$316

$228

38.8%

Inventory

$581

$547

6.1%

Liabilities

Q1 2008

Q1 2007

Change

Accounts Payable

$341

$276

23.6%

Long-Term Debt

$550

$2

Big %

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2008

Q1 2007

Change

Cash From Ops.

$808

$678

19.0%

Capital Expenditures

$264

$271

(2.6%)

Free Cash Flow

$544

$408

33.4%

Owner Earnings

$84

$51

67.0%

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating (out of 5)

McDonald's (NYSE: MCD  )

$60,660

26.53

****

Starbucks

$13,340

20.86

***

Panera Bread (Nasdaq: PNRA  )

$1,150

19.9

***

Peet's Coffee & Tea (Nasdaq: PEET  )

$304

42.03

***

Krispy Kreme Doughnuts (NYSE: KKD  )

$180

N/A

*

Using the latest reported numbers from Yahoo!. Keep your partners close and the competition in your vest pocket.

Related Foolishness:


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