Laserlike Focus Drives Earnings Growth At Starbucks

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GiveStarbucks ( SBUX ) credit. It has a market capitalization of $51 billion and it continues to grow earnings nicely.

Even better, the company is returning cash to shareholders with a quarterly dividend of 21 cents a share, giving it an annual yield of 1.2%.

When companies get really big, it's often hard to maintain solid earnings and sales growth rates. But so far, Starbucks remains on the growth path. Annual earnings are seen rising 22% this year and 21% in 2014.

The stock was featured in this space in late June just after the company announced further plans to expand aggressively in Southeast Asia.

At the time, it was trading just above a three-weeks-tight buy point of 65.03. Starbucks continues to trade tightly ahead of its earnings report Thursday after the close. The consensus estimate calls for profit of 53 cents a share, up 23% from a year ago with sales up 13% to $3.72 billion.

Once again, investors will be looking at sales trends closely. When Starbucks reported fiscal second-quarter results in April, global same-store sales rose 6%, flat from the prior quarter. In the Americas, sales rose 7%, also flat. In the China/Asia Pacific region, they rose 8%, a slight deceleration from 11% growth in the first quarter.

Starbucks continues to eye the single-serve coffee market for growth. Starbucks andGreen Mountain Coffee Roasters ( GMCR ) have been partners since 2011. In May, the companies agreed to extend the partnership for at least another five years. Starbucks and Tazo-branded single-serve packs are made and sold for Keurig brewing machines. Some thought the partnership might dissolve after Starbucks introduced Verismo, its own single-cup brewer, last year.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas

Referenced Stocks: GMCR , SBUX

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