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General Investing

Starbucks Corporation (SBUX) Grows Earnings at 20% and Continues Benefiting from Coffee Bean Tailwinds

March 11, 2013

Starbucks Corporation (SBUX) remains unusually stable and is posting strong same-store sales over last year, and she expects the favorable trends in the coffee bean market and the company’s growth initiatives in other hot beverages and food to result in continued growth for this coffee giant, says Sharon Zackfia, Partner and Group Head-Consumer at William Blair & Company, L.L.C.

“I think Starbucks stands out as a name that will likely be another strong performer in 2013. Starbucks has had some of the strongest same-store sales performance in the industry, which is notable because it has 18,000 restaurants and it is posting all-time-high average unit volumes in the U.S. It’s a strong testament to the brand and labor and throughput initiatives that Starbucks can be at all-time-high average unit volumes and still lead the industry in same-store sales growth.”

Zackfia says Starbucks sales continue to remain healthy, and the company currently has tailwinds which would help accelerate earnings growth for the company into 2014. She also says the companies initiatives with new accretive brands would result in double-digit growth.

“Commodity costs continue to become favorable in the coffee market, and that’s now a multiyear tailwind through 2015. And some of the initiatives that Starbucks is investing in during fiscal 2013 will turn more accretive in 2014, including La Boulange, Evolution Fresh and Teavana, so I think there’s unusually high visibility on Starbucks’ ability to continue to grow earnings at a 20% or greater clip, which is unusual for a company of its size and market cap,” Zackfia said.

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