Starbucks acquired Evolution Fresh, which produces a line of cold pressed juices, in 2011 and has been working steadily to roll out the juice. It has also expanded into the tea business via its purchase of Teavana and into the fine pastry business with its purchase of La Boulange.
Starbucks foray into the $6 billion yogurt business and its continuous expansion in the food industry has been providing excellent growth opportunities and is one of the major reasons to have helped the company deliver excellent quarterly earnings.
Valuation and peer analysis
With a total market cap of $54.5 billion, Starbucks Corporation (NASDAQ:SBUX) is currently trading at $73.36. The shares have appreciated gradually since 2009 from $8.40 per share to its current price and have almost doubled over the last 12 months. With a quarterly revenue growth as high as 13%, it currently has a dividend yield of 1.2%. While Starbucks has delivered an impressive quarterly result and the shares have been performing well, the same cannot be said about Panera Bread Co (NASDAQ:PNRA).
Shares of Panera Bread Co (NASDAQ:PNRA) had appreciated to $190 per share from $160 per share in just a few months. However, the share price crashed by around 7% on the day the company released its second quarter results. The company saw a 2% decline in its revenue as compared to its first quarter. It reported slower than expected revenue growth and lower comparable store sales. A gradual decline in its breakfast items was one of the reasons for the decline in revenue.
Panera Bread Co (NASDAQ:PNRA) has a gross margin and operating margin (ttm) of 36% and 13%, respectively, as compared to Starbucks 57% and 14% and doesn’t pay dividends to its shareholders. On the positive side, the bakery chain opened 35 new stores in the second quarter and the company has plans of opening 50-60 stores by the end of this fiscal year.
Last word
Starbucks Corporation (NASDAQ:SBUX) growth story continues. An excellent third quarter earnings performance, excellent strategic alliances, growing brands and profitable business expansion plans makes it an excellent stock to buy. Add this stock to your portfolio and enjoy the company’s success.
The article Starbucks: Brewing Up Strong Earnings originally appeared on Fool.com and is written by aastha jhunjhunwala.
aastha jhunjhunwala has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters, Panera Bread, and Starbucks. The Motley Fool owns shares of Panera Bread and Starbucks. aastha is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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