Why Starbucks' Shares Went Cold Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of coffee giant Starbucks (Nasdaq: SBUX  ) fell 10% today after the company issued earnings and a disappointing guidance.

So what: Fiscal-third-quarter revenue grew 13% to $3.3 billion and earnings per share rose 19% to $0.43 per share. The results were just short of expectations, but investors are eyeing the company's guidance as the reason to sell today. Management now expects fourth-quarter-revenue growth of 10%-12% and earnings per share of $0.44-$0.45. This is lower than previously expected.

Now what: The slow economy was blamed for the lowered forecast, and it got investors spooked today. But the foundation of Starbucks appears to still be strong and the company expects to grow double digits next year as well. With shares trading at 26 times 2012 estimates, I'm not rushing out to buy shares today, but I don't think the guidance numbers are a reason to panic either.

Interested in more info on Starbucks? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Starbucks. Motley Fool newsletter services have recommended writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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8/22/2014 4:00 PM
SBUX $77.28 Down -0.19 -0.25%
Starbucks CAPS Rating: ****

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