In an earnings season steeped in tepid quarterly results for consumer-facing companies, Starbucks
Starbucks' fiscal third-quarter net income increased 34%, to $279.1 million, or $0.36 per share. Total revenue increased 12%, to $2.9 billion, and same-store sales surged 8%. Even better, the comps growth was driven by increased customer traffic, as opposed to increases in the average ticket. The coffee giant even grew operating margin by 120 basis points, to 13.7%.
These are significant achievements in the current climate. Consumers' constrained budgets could have taken a serious toll on Starbucks in the near term. Shareholders can breathe a sigh of relief at the company's continued strength.
Even on a good day, the competitive landscape for coffee chains can be cruel. McDonald's
This week's hot IPO, Dunkin' Brands
Green Mountain Coffee Roasters
Although Starbucks' forward price-to-earnings ratio of 22 may sound pricey compared to stocks like McDonald's, let's not forget that the java giant has recently further focused plans to drive deeper into the China market. That could serve up even more growth for Starbucks -- and justify its current premium.
Alyce Lomax owns shares of Starbucks. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters, McDonald's, and Starbucks. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters. Motley Fool newsletter services have recommended shorting Green Mountain Coffee Roasters. 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.