Starbucks soars on a record setting performance
Shares of Starbucks (NASDAQ:SBUX) traded sharply to the upside on Friday morning following a reported record setting performance after the market close on Thursday. Shares traded as high as $73.52 early in the session before pulling back slightly to the high 72’s intraday. The 7% move higher was a result of strong data and performance out on every business segment within the company. Lets take a look at some of the key metrics analysts will be using in the days ahead to adjust their spreadsheets and price targets.
Starbucks global comparable store sales rose by 8% in the third quarter as a result of a number of tailwinds. On segment by segment basis we see strength across the board with 9% growth in each of the Americas and China Asia-Pacific segments. This growth was due in large part to a 7% increase in traffic through the company’s impressive number of locations. Revenue in the quarter increased by a full 13% over last year to a record $3.7 billion. Rising revenues in combination with 150 basis point improvement in operating margins allowed the company to generate record earnings per share. Third quarter EPS of $0.55 per share, 28% over last years’ third quarter, represents the second highest EPS of any quarter in Starbucks 42 year history.
China continues to fuel exceptional growth for the company, even with a rapidly expanding store base the company generated 9% comps and an 8% increase in traffic within the region. By the end of this year the company announced it will have over 4,000 stores in Asia, including the 1,000 within China alone. By 2014 management has predicted China will become the largest market for the company outside the United States. The company has done an exceptional job as of late incorporating its acquisitions into its long term growth thesis. The acquisitions of Teavana and Evolution Fresh have started to bear some serious fruit for the company. On Friday morning a number of analysts, including Goldman Sachs, upgraded the company with higher price targets to reflect the stellar performance.
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