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Starbucks Corporation (SBUX): This Earnings Report Leaves 1 Question Unanswered

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Starbucks Corporation (SBUX)I’m a pretty logical thinker and when I look at a company’s earnings report I like it when things seem to make sense. The good news is, when I read Starbucks Corporation (NASDAQ:SBUX) earnings report most of the information was very positive. The bad news is, I got to the end of the report with one major question left unanswered.

There Can Be More Than One Winner
In the coffee and tea markets that Starbucks competes in, I’ve heard some investors suggest that where Starbucks wins, others lose. I don’t believe that is the case at all. While on an individual purchase, if a customer chooses Starbucks over say Dunkin Brands Group Inc (NASDAQ:DNKN) Dunkin Donuts, there is a clear winner and loser, this isn’t like other industries.

In the coffee and tea industry, I can buy a $4 Starbucks beverage in the morning, and then buy a $2 Dunkin Donuts coffee in the afternoon. I’ve known some people to use their Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) Keurig machine in the morning, then stop by Starbucks for a coffee in the early afternoon, and then make a run by McDonald’s Corporation (NYSE:MCD) for a McCafe beverage in the late afternoon. Each purchase isn’t necessarily dependent on the prior purchase. The bottom line is, Starbucks can do well, and so can many other companies.

Is This Growth Enough?
I know there are some old school Starbucks investors looking at the company’s current quarter and wondering if this is it? Reporting net revenues up 11% and EPS up 14% should be more than enough, but Starbucks Corporation (NASDAQ:SBUX)’s investors have gotten spoiled over the years. Analysts seem to share this optimism and are expecting over 18.5% EPS growth in the next few years.

When I look at the companies Starbucks competes with, their growth aspirations are pretty easy to understand. Dunkin Brands is expecting revenue growth of 6% to 8% to help the company generate 15.6% to 17.9% EPS growth for 2013. McDonald’s expects that menu expansion, new international locations, and low single-digit same-store sales increases to produce high single-digit EPS growth. Since analysts are calling for 5.1% revenue growth and 8.7% EPS growth, this makes sense. Green Mountain expects sales growth of 15% to 20%, to lead to at least 13% EPS growth, as the company continues to invest for the future.

2 + 2 = 3?
I sort of feel like I’m reading the above equation when I look at Starbucks plans for this next year. The company is suggesting 1,300 new stores will be opened, representing 22% growth over 2012. The company is also suggesting “mid-single digit comps.” Assuming stable pricing and everything else staying the same, this would seem to argue for 22% to 27% revenue growth. I know this is overly simplistic, but 22% plus 5% equals 27%, right? So what is causing Starbucks to suggest revenue growth of 10% to 13%?

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