Starbucks Corporation (SBUX): Can This Impressive Expansion Last?

Is this the time to buy?

If we compare Starbucks to its peers, the stock seems overpriced as it is trading at 25 times forward P/E, while Dunkin’ Brands is trading at 23 times and McDonald’s at 15.7 times. The best moment to make a decision is to wait for the resolution regarding the Kraft lawsuit. The story started with Starbucks alleging that it would discontinue their distribution agreement due to material breaches from Kraft. But Kraft denied those breaches and is suing the coffee company for $2.9 billion plus attorney fees.

If the case goes wrong for Starbucks, it could hurt its balance sheet or it could make the company tap the debt markets. This will definitely impact its stock price and could lead to an opening for investors to take a position at a lower price.

Vanina Egea has no position in any stocks mentioned. The Motley Fool recommends McDonald’s and Starbucks. The Motley Fool owns shares of McDonald’s and Starbucks.

The article Can This Impressive Expansion Last? originally appeared on Fool.com and is written by Vanina Egea.

Vanina 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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