With the S&P 500 climbing 7.26% year-to-date, the largest coffee retailer in the world has only inched up 3.55%. Starbucks Corporation (NASDAQ:SBUX) recorded record earnings in 2012 and is going to continue to grow over the next several years. I believe this underperformance has provided a buying opportunity for those searching for an investment in this high-flying market.
2012 in review
Fiscal 2012 was a record year filled with growth for Starbucks.
Revenue increased 14% to a record $13.3 billion
Earnings per share increased 18% to $1.79
Opened 1,063 net new stores globally
Operating margin increased 0.2% to 15%
$1.1 billion was returned to shareholders in the form of dividends and share repurchases
First quarter results
The first quarter of fiscal 2013 was another record setter. The report was released on Jan. 24 and included these financial highlights:
Revenues increased 11% to a record $3.8 billion
Earnings per share increased 14% to a record $0.57
Opened 212 net new stores globally, including its first 3 in India
Global comparable store sales increased 6%
Analysts believe in Starbucks Corporation (NASDAQ:SBUX) about as much as Howard Schultz. Earnings are expected to grow at an incredible rate over the next 3 years and these estimates may even be too low. This projected growth is shown in the chart below.
2013: 20.7% growth
2014: 21.3% growth
2015: 19.9% growth
In 2012, Starbucks Corporation (NASDAQ:SBUX) opened 1,063 net new stores to bring their total to 18,066. Management announced that they expect to open another 1,300 stores in 2013, a 22% increase year-over-year. The global growth model of Starbucks is unmatched in the industry and will be beneficial in its mission to continue increasing shareholder value.
As of the market close on Mar. 28, Starbucks Corporation (NASDAQ:SBUX) was trading at $56.95. At this level, it was trading at 30.6 times earnings, which is right around the industry average of 31.3. However, based on 2015 earnings, it was trading at a multiple of just 18.1. Overall, the stock is trading 8.15% below its 52-week high of $62 reached in April of 2012.