Starbucks Earnings Highlights You Need to Know

The lattes have been poured, the espresso slung, and the the Frappuccinos served. Fiscal 2012 is now over for Starbucks (Nasdaq: SBUX  ) , which just reported its fourth-quarter and annual results. All in all, both were generally high enough to exceed estimates and even break previous records in an instance or two. And the company also served up a nice early holiday present for its shareholders.

Steady advance
The first record was hit in quarterly net revenues, which climbed 11% year over year to $3.36 billion in the fourth quarter. Despite being the highest-ever figure for the company, it undoubtedly left some Starbucks-watchers lightly disappointed -- average analyst expectations were for around $3.38 billion.

Net profit didn't post a record, but it comfortably outpaced the anticipations of those analysts. The company's bottom line for the quarter came in at $359 million ($0.46 per share), as opposed to expectations of $346 million or so. At first blush, that wasn't a huge improvement on fourth-quarter 2011's $358.5 million, but that figure included a one-time gain of $0.10 per share.

Record No. 2 was for annual net revenues, which at $13.3 billion grew 14% from fiscal 2011. This was due in no small part to a host of new stores opening for business; the company brought 1,063 new Starbucks to life throughout the world during the year. Net also increased, by 11% year over year to $1.38 billion, although this represented a shave in net margin (to 10.4% from last year's 10.6%).

China contributes to comps
Like many global companies, Starbucks got a boost from the Asian market. Although growth in key markets in that part of the world has been slowing, it's still giving enough of a boost to make a difference. The company's highest growth in same-store sales in fiscal 2012 came from its China/Asia-Pacific theater of operations, where the metric rose 15% year over year. Hopefully for the company, the Chinese economy won't slip too much -- it recently opened its 700th store in that market

That exceeded growth in the Americas (8%) and, inevitably, was much better than the 0% recorded in the Europe, Middle East, and Africa segment, dominated by the first, economically strapped continent in that list.

Brew-it-yourself profits
Meanwhile, Starbucks has waded more deeply into the brew-it-yourself segment. During the fourth quarter it introduced the Verismo line, a pod coffee-brewing system with prices ranging from $199 to $399.  It's made sure to push the products at most of its locations, which include specialty retailers. All told, the company says Verismo can be bought at over 6,400 places.

This has ramped up the pressure on Green Mountain Coffee Roasters (Nasdaq: GMCR  ) in terms of coffee-making hardware, as that company -- beset by other problems -- has to fight harder to sell its Keurig machines.

Upsizing the dividend
All of the above has given Starbucks room to increase its payout for shareholders. The company's board has given a sizable boost to the dividend, lifting it by 24% to a quarterly $0.21 per share, or $0.84 at an annual rate.

This equates to a yield of 1.8%. That's still lower than that of coffee-flavored rivals Dunkin' Brands (Nasdaq: DNKN  ) and McDonald's (NYSE: MCD  ) . It's the best of the pure-play coffee stocks, though; neither Caribou (Nasdaq: CBOU  ) nor the soon-to-be-private Peet's pay any dividend at all.

That's a cup anyone can enjoy, and Starbucks investors will certainly hope the company can add more foam to its numbers as it starts brewing for 2013.

Green Mountain isn't doing as well as Starbucks, particularly in terms of share price. Many investors are wondering whether this is the end of the former market darling, or the perfect entry point for an enormous rebound. You can find our recommendation for how to play the company in our new premium research report. In it you'll find everything you need to know about the company, including whether Green Mountain is a buy at today's prices. Click here for instant access.

Eric Volkman has no positions in the stocks mentioned above. The Motley Fool owns shares of McDonald's and Starbucks and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters, short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters, and short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Green Mountain Coffee Roasters, McDonald's, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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