Starbucks (NASDAQ:SBUX), Starbucks. That was one heck of a rotten quarterly earnings report. But let's take a deep breath, count to 10, and be frank -- who was expecting anything good, with all we've been able to glean about consumer spending in the last couple of months?

Ugly numbers
You have to scan the press release a little to get to the meat, since the subheads on it toss around words like "transitional," "re-architected," and "transformation." Of course, that all translates into "Things still stink right now."

Fourth-quarter net income plunged 96.6% to $5.4 million, or $0.01 per share. Nauseating. The quarter included about $0.09 per share in restructuring charges, which included charges related to store closures; back those charges out, and net income would have been $71 million, or $0.10 per share.

Revenues increased a relatively anemic 3% to $2.5 billion, and the 8% plunge in same-store sales is simply chilling when you remember the crazy comps growth Starbucks posted in yesteryears -- which seem increasingly far away at the moment. The explanation won't surprise anyone: deteriorating traffic trends and a decline in average value per transaction. Yep, sounds like a recession, all right.

Misery loves company
Returned CEO and founder Howard Schultz put a positive spin on things. He said recent transformational and architectural efforts position the company to drive earnings growth in fiscal 2009. He also said recent retail data shows that Starbucks may be faring a bit better than other high-end retail names. Schultz said October didn't yield a further deterioration in comps or traffic, and it's pretty much understood that October was terrible on the retail front, so let's hope that outlook holds. Schultz said he hoped the fourth quarter hit a "bottoming-out milestone."

After all, one could call this quarter "the quarter of terror," based on the litany of consumer-facing stocks that have had the wind knocked out of them from all of the macroeconomic punches. Whole Foods Market (NASDAQ:WFMI) and Bare Escentuals (NASDAQ:BARE) are two that I've covered recently.

Odds are good that many high-end, luxury brands will have a difficult time as excessive luxury tastes become a thing of the past for many consumers. For what it's worth, though, I think premium coffee is a different animal from the merchandise that companies such as Tiffany (NYSE:TIF), Nordstrom (NYSE:JWN), and lululemon athletica (NASDAQ:LULU) provide. Diamond jewelry, $1,000 boots, and expensive yoga togs all sound like good potential budget cuts to me, but we all still enjoy our coffee in the morning.

Still, I've noticed extreme pessimism about Starbucks' stock lately, and I've even run across comments from people who believe the company won't even make it out of this recession alive. In fact, Foolish readers voted it the scariest stock in our Halloween contest. That floors me. Good grief -- my nominee, Talbots (NYSE:TLB), strikes me as far more terrifying, but that just goes to show how down on Starbucks folks are right now. I'm starting to wonder whether the pessimism can't get any worse.  

Figuring the future
I've often warned about companies that need to turn around their businesses and weather a consumer slowdown. It's a doubly difficult endeavor to do so. However, I have to say that Starbucks seems more likely to pull it off than many other retail names. I still believe it has an excellent brand, even if consumers aren't chugging as much of its coffees these days.

And even in these dreadful times, Schultz's comments about certain initiatives -- such as doubling Starbucks' fair-trade coffee purchases, to become the largest such purchaser in the world -- remind me why I believe in this stock. Even though people may be more focused on preserving their budgets than on socially responsible initiatives, these remain the types of actions that differentiate Starbucks' brand for the long term.

Starbucks gave several scenarios for earnings next year in its press release and said that in the worst-case scenario it outlined -- comps down 7% -- it still believes that it could report earnings of $0.59 per share in fiscal 2009. If consolidated comps fall by only 2%, it said it expects $0.78 per share in non-GAAP earnings in fiscal 2009.

Starbucks shares have plummeted by 56% in the last year. Its work is cut out for it, of course, and just how bad the consumer feels -- and for how long -- will be important. But if Starbucks does report $0.78 per share in earnings in fiscal 2009, it's trading at only about 13 times forward earnings. Look at Starbucks over the years, and you may remember a time when the thought of having Starbucks trade at such a low multiple would have seemed outlandish. In fact, MSN Money has its five-year high price-to-earnings ratio at 71. A bad year and a no-show turnaround will do that to you.

Whether you think Starbucks is cheap at these levels depends on whether you believe it can reignite its growth, learn its lessons, and still manage growth over the long term, even if it won't be as heady as it used to be. I believe it can. I think it's still a high-quality stock for the long haul, despite all of the current, bitter pessimism.  

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.