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
Rival Starbucks
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.
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