Many caffeinated coffee stocks have had a hard time lately, and third-quarter results from Peet's Coffee & Tea
Granted, net income did increase by 9.9% to $2 million, or $0.15 per share. Net revenue increased 12.5% to $68.5 million. Peet's reaffirmed its guidance for this year, calling for $0.77 per share to $0.82 per share in earnings, and said that in 2009, earnings will increase 20% to 25%. In the current climate, these aren't exactly terrible tidings.
Still, this quarter is a far cry from Peet's second-quarter results, when it reported a 66.7% increase in net income; the stock surged on those results. Of course, let's face another fact: Peet's is arguably a premium-priced stock compared to rivals and to many stocks overall, trading at 28 times its trailing earnings. When you can purchase stock of high-quality companies like Apple
Last but not least, competition should intensify for the fewer dollars consumers are willing to spend. As much as many folks are very down on Starbucks, I think it's a major mistake to underestimate its chances at a comeback.
Last quarter, I admitted Peet's has got some nice attributes, such as ample room for growth; and of course, that quarter was impressive. However, I also cautioned that it would probably be better for investors to wait for cheaper levels to pour themselves some Peet's shares. Peet's is better on a watch list than in a portfolio.