It's Friday, the market's up, and we're in a good enough mood to talk junk food and then send you off for a hot summer weekend.

The voices in Fool Rick Munarriz's (TMF Edible) head become unbearable sometimes. He duels for Fools, to say the least. This week he's debating whether there's bigger profits in Oreos or chocolate chip cookies. Give it a read and then take our junk food vs. healthy-eating poll on our main page. Who will win in the long run? The fast-food giants or Whole Foods(Nasdaq: WFMI)?

In today's Motley Fool Take:

eBay Hits a Homer

Before today's 4% dip, shares of eBay(Nasdaq: EBAY) had been up 70% since the start of the year. And if yesterday's second-quarter results were indicative of anything, it's that eBay's long-term future as a business looks excellent. The stock, however, will remain volatile -- a victim of its own success.

The company has knocked the cover off the ball so many times in past quarters that simply knocking the ball out of the park seems to draw boos from the investment crowd. For the last few quarters, the stock tended to rise before each earnings announcement and then, usually, dip right after. Like a 7th-inning stretch, with eBay each quarterly report seems to be a time to relax and let some air out of the stock.

But the home team is winning. The company's second-quarter revenue rose 91% year over year, to $509 million, and operating income increased 91% to $152 million. Its operating margin was 30% (33% pro forma), edging ever closer to the 35% objective of 2005. Earnings per share clocked in at $0.33 ($0.37 pro forma), up 102%, while U.S. transaction revenue rose 45% and overseas auction revenue gained 146%.

eBay's operations generated $208 million in cash during the quarter, more than double last year's $92 million, but free cash flow dove due to the purchase of new office facilities -- a one-time event.

"Seasonality" is reportedly what disappointed some investors. While strong, growth was not as robust as previous quarters due to the effects of summer, a time when people tend to let their computers sleep more often as they themselves stand up and head outdoors. As eBay's business matures, seasonality is likely to become more pronounced. The current quarter is already experiencing this, with eBay projecting $515 million in third quarter sales, up only slightly from the second quarter.

But that doesn't dampen the online auctioneer's long-term prospects. With more than $2 billion in sales expected this year, eBay is well on its way to reaching its goal of $3 billion in 2005 revenue. Meantime, the $110 stock trades at 74 times the company's improved guidance of up to $1.47 per share in pro forma 2003 earnings, and at a similar multiple to free cash flow.

If you believe a company deserves to trade at valuation multiples near its growth rate, then eBay is right in the ballpark.

The company set a 2-for-1 stock split payable on August 28.

Quote of Note

"Commerce is really as interesting as nature." -- Henry David Thoreau, 1817–1862, U.S. philosopher, author, naturalist

Shameless Plug: Gardners on TV

Catch a cameo appearance by our favorite founding Fools on NETworth, a high-energy special one-hour PBS television program that shows how easy it is to manage your personal finances with a little help from the Web. Find a station and broadcast time near you. If you're in the Seattle area, tune in to KCTS at 11 a.m. on Saturday to see David and Tom Gardner!

Starbucks Gets an A-

Starbucks (Nasdaq: SBUX) shareholders are like the demanding parents of an A+ student: Anything less than perfection is simply not good enough.

Or in the case of Starbucks, maybe we should say, not great enough. Because without a doubt, Starbucks' financial results are consistently great -- it's just a question of shade of greatness. In this particular quarter, announced last night, the shade was judged to be on the lesser side of great, perhaps an A-. Consequently, the stock is trading down about 0.5% so far today.

Growth was fantastic, as you'd expect. Sales grew by 23%, while EPS managed a 21% increase. The A+ aspect was a stellar 8% growth in comparable store sales. Management made a point of noting that "the increase in comparable store sales was due almost entirely to an increase in customer transactions." Translation: The comp gains are the result of more sales, not higher prices, as many might expect.

The "A-" aspect of Starbucks' growth is EPS, which grew slower than sales. Many had expected Starbucks' strong sales growth would be leveraged at the bottom line. But operating margins for the quarter actually declined to 10.2% from 10.4% in the year-ago quarter.

The lower margins resulted primarily from higher green coffee costs, which bumped cost of goods sold to 41.1% of sales versus only 40.4% a year ago. Of course, management has no control over coffee costs. It just so happened that the price of green coffee hit a seven-year low at this time last year and has gradually increased since.

Still, for an A+ student, a declining operating margin, no matter how slight the decline, is somewhat disappointing. This is the type of demanding attitude shareholders rightfully take when their company trades at 40 times trailing earnings.

Even looking out to next year's expected earnings of $0.83 to $0.85 per share, Starbucks carries a 31x multiple. At that valuation, it will have to return to its A+ ways to deliver further gains to shareholders.

Motley Fool Credit Center

Credit can be your best friend or your worst enemy. And you know what they say... Don't turn your back on your enemies. Friends may come and go, but enemies accumulate. So it's time to address that big elephant in the closet -- your credit. We've got your back! Visit our new Motley Fool Credit Center, and learn how to make credit work for you.

When Rocket Men Go Bad

The United States Air Force took back contracts worth more than $1 billion in rocket business from Boeing(NYSE: BA) after determining that employees at the company stole reams of proprietary documents from rival Lockheed Martin(NYSE: LMT).

The incident occurred back in 1998, when Lockheed was the dominant rocket supplier, then heading into a competition with Boeing in which it won just 7 of 28 scheduled launches. Boeing had sought desperately to become a larger player in the business and its victory shocked many in the industry.

We should note that the recent action by the Air Force in no way impacts the criminal investigations by the Justice Department, nor will it forestall Lockheed's lawsuit against Boeing, which alleges a conspiracy to steal trade secrets. But one would imagine that this quote from Air Force space official Peter Teets will be front and center:

"[Boeing] committed serious and substantial violations of the law." Ouch. Boeing, for its part has apologized and fired the individuals responsible for the theft and has pledged to cooperate with the investigation.

Curiously, Boeing shares have not really budged. This might be why: Boeing may indeed face severe sanctions and monetary penalties from further adjudication, but its rocket business has been a consistent money loser. In some ways this may actually improve Boeing's overall profitability. Or so you could argue.

At the same time, Boeing's overall strategy in its defense divisions has been to serve as an integrator of components from various military projects -- including enormous amounts of material that does not originate at Boeing. Should the company lose its patina as a highly trusted partner for the Pentagon, this part of its business could be in big, big trouble.

Clearly, with the commercial aircraft business in the doldrums, this could not come at a worse time for Boeing. The company is trying to ensure that its military business fills the gap, but with the Air Force at minimum placing restrictions on further business dealings, this is shaping up to be a crucial juncture in the history of one of America's most treasured companies.

Discussion Board of the Day: Investing for Income

What do you think of the companies announcing one-time dividend distributions? Are there better ways to milk some income out of your portfolio? All this and more -- in the Investing for Income discussion board. Only on

Not yet a member of the Fool Community? Jump into our discussion boards free for 30 days!

Quick Takes

Because of its $60 billion Pharmacia acquisition in April, Pfizer(NYSE: PFE) turned in a second-quarter loss today. The drug company lost $3.59 billion, or $0.48 per share. Excluding items, it netted $0.30 per share for the quarter. In the year-ago period, Pfizer earned $1.96 billion, or $0.32 a share.

Shares of retailer J. Jill(Nasdaq: JILL) fell 8% today after the company announced lower second-quarter earnings and warned that it could post a third-quarter loss. For Q2, J. Jill earned $6.1 million ($0.30 a share), vs. the prior quarter's $6.4 million ($0.32 a share). Looking ahead to the third quarter, excess spring inventory may sideline J. Jill's profits. The company didn't say exactly how large the loss could be. Analysts had been expecting J. Jill to post a Q3 profit of $0.20.

Steel company Nucor(NYSE: NUE) reported sharply lower second-quarter earnings today. The firm earned just $8.4 million, or $0.11 a share, compared to $59.7 million, or $0.76 a share, a year ago. Analysts were anticipating $0.22. Nucor doesn't think demand will pick up in the third quarter, and reduced earnings expectations to $0.15-$0.20 per share, substantially below the $0.39 consensus estimate.

Applebee's (Nasdaq: APPB) is teaming up with Weight Watchers(NYSE: WTW) to offer new diet cuisine in the company's chain of restaurants. Applebee's will test the reduced-calorie appetizers, entrees, and desserts in some markets later this year. The full rollout to all Applebee's restaurants will happen next year.

And Finally...

Today on

Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Kate Southerland, Dayana Yochim