Someday, I’m going to be a better investor and a worse writer, and just take a few weeks off from covering Starbucks Corporation (NASDAQ:SBUX) so that I can actually buy some. (The Motley Fool has pretty strict trading guidelines for its writers.) Once again, Starbucks Corporation (NASDAQ:SBUX) surprised the market and beat the pants off analysts’ estimates, sending shares up more than 6% in early trading.
The best news out of the earnings announcement came from the U.S., where comparable sales hit 9% — which seems silly. Overall, the company managed to increase worldwide comparable sales by 8%, with Europe holding everyone else back a bit. The stock continues to set new record highs, and it’s trading at a steep premium. Even so, investors are eager to get in.
Sales upon sales
Starbucks Corporation (NASDAQ:SBUX) increased its earnings per share by 28% year over year. That was the result of the increase in revenue and an expansion in the company’s operating margin, which rose to 16.4%. The company cited lower coffee costs for the increased margin, and continuing low prices should keep costs down for some time.
Starbucks Corporation (NASDAQ:SBUX) raised its full-year earnings forecast to between $2.22 and $2.23 per share. It also provided fiscal 2014 financial targets, including earnings-per-share growth of 18% to 22%. The strong message from Starbucks Corporation (NASDAQ:SBUX) is in sharp contrast to the downbeat message out of Panera Bread Co (NASDAQ:PNRA) earlier this week.
The cafe and bakery chain announced slower-than-predicted revenue growth, and the market brought the shares back in line with revised expectations. Panera Bread Co (NASDAQ:PNRA) had lower comparable store sales than the company had forecast; it blamed a decrease in the growth rate of number of transactions and a decline in comparable sales of breakfast items.
Starbucks’ time to shine
One of Panera Bread Co (NASDAQ:PNRA)’s insights was that it has shifted advertising dollars away from breakfast while competitors have moved into the space. Starbucks Corporation (NASDAQ:SBUX), in particular, is focusing more and more on food. On its earnings call, Starbucks Corporation (NASDAQ:SBUX) noted that its recent La Boulange experiments have already been a big success with the breakfast crowd, highlighting the company’s commitment to waking you up.
On top of the new food push, the company also recently increased some of its prices, which should help its margins further down the line. That should leave it with more cash, and at some point, investors might see a meaningful increase in the company’s dividend. Right now, Starbucks Corporation (NASDAQ:SBUX) is paying out a measly 1.2% dividend, but it has a tidy little cash pile that could be tapped once its growth slows.
All in all, it was a great quarter for Starbucks Corporation (NASDAQ:SBUX), and a great quarter to be a Starbucks investor. Maybe next time, I can count myself in that group.
The article Starbucks Brewing Up Big Profits originally appeared on Fool.com.
Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Panera Bread Co (NASDAQ:PNRA) and Starbucks. The Motley Fool owns shares of Panera Bread Co (NASDAQ:PNRA) and Starbucks Corporation (NASDAQ:SBUX).
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