Starbucks' Q2 net income increased 20.4% to $261.6 million, or $0.34 per share. Revenue increased 9.9% to $2.79 billion. Same-store sales soared 7%, driven mostly by increased customer traffic; Starbucks comps in the U.S. rose by a similarly strong 7%.
Although investors may find Starbucks' outlook uninspiring, its fiscal 2011 earnings guidance for $1.46 to $1.48 per share (reflecting the high end of its 15%-to-20% earnings-growth forecast) doesn't sound too shabby. Remember, that guidance includes expected higher commodity costs for dairy, an important ingredient in Starbucks' beverages. Nonetheless, the guidance upset Wall Street analysts' expectations for fiscal 2011 earnings of $1.50 per share.
I recently wondered whether 40-year-old Starbucks had jumped the shark, particularly in light of its agreement to provide its own K-Cups for Green Mountain Coffee Roasters'
There's no questioning the coffee chain's maturity at this point. Recent data said Starbucks' domestic sales have vaulted it into the top three restaurant chains in the U.S., stealing the third-place crown from Burger King. McDonald's
Best of all, Starbucks has achieved its grown-up success -- and its grown-up dividend payments -- in a way that should make investors proud. As I read CEO Howard Schultz's new book, Onward, it reminds me of the elements that attracted me to Starbucks' stock in the first place. Years ago, innovations such as employee health care benefits and sustainable business practices seemed alien to Starbucks' industry. Now, they're welcome distinctions for those of us who value companies that do well by doing good.
At 20 times forward earnings, I wouldn't call Starbucks' shares dirt cheap or outrageously expensive in light of of fiscal 2012 growth estimates. Still, for a mature company that's coping well with rising commodity costs, Starbucks' second-quarter tidings definitely weren't grounds for dismissal from investors' portfolios.
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