Starbucks' Good Old Days Could Still Be Ahead

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From 1993 through 2007, annual revenue growth atStarbucks ( SBUX ) never fell below 20%.

In the past five years, sales growth has never exceeded 14%.

No question that Starbucks is on a slower track.


However, it isn't clear that this represents an aging factor for the company incorporated in 1985 or a pause that eventually leads to a new burst of growth.

Starbucks' current three-year growth rates are 19% for earnings and 12% for revenue.

The Street, though, expects EPS to rise 22% in fiscal 2013 ending in September and 20% in fiscal 2014. Revenue growth is estimated at 12% for both years.

Growth in international sales and channel-development sales could be pivotal to stepping up the pace.

In fiscal 2012 ended in September, sales in the Asia-Pacific region grew 31%, including 15% revenue growth in same-store sales.

During the year, 154 stores were added in the region.

Sales growth in other regions was in the 9% to 10% area -- good, but not great.

Meanwhile, channel-development sales leapt 50%. This includes items such as K-Cup portion packs and packaged coffee.

With the fast growth in channel sales and Asia, Starbucks doesn't look like it's ready for the stock market's version of golf's senior tour.

The good news for income investors is that Starbucks holds potential for price appreciation and dividend growth. The annualized dividend yield is 1.4%.

Starbucks wrapped up acquisition of the Teavana tea product retail chain in late December.

In the April conference call, CEO Howard Schultz said, "We now intend to do for tea what we have done for coffee."

If Schultz is right, Starbucks could have some strong days ahead.



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: Personal Finance , Investing Ideas

Referenced Stocks: SBUX

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