Notable news items/price action from the past twenty-four hours.
- SBUX is rated neutral at Janney, according to a report this morning that highlights coffee prices as the primary risk to EPS over the next twelve months. Given SBUX’s customer loyalty, control over its supply chain, and – most importantly – the fact that they have locked in their coffee prices for the year, I am maintaining a positive view on SBUX.
- SBUX’s managing director for the U.K. has spoken of a difficult sales climate in which fewer people are out on the streets shopping. The U.K.’s 736 Starbucks stores saw a drop in sales since early January.
- SBUX turned 40 yesterday and unveiled its new logo.
- CBRL’s soft performance over the last month has coincided with a spike in gasoline prices. MasterCard Advisors’ SpendingPulse report showed yesterday that average gasoline demand fell 1.8% to 8.953 million barrels-per-day in the week to March 4th. Year-over-year, demand slipped 1%. Retail gasoline prices rose 19 cents last week to $3.43 per gallon, 27% higher than a year ago, after crude oil rose to a 29-month high on unrest in the Middle East, the report said.
- SONC gained almost 4% on accelerating volume following an upgrade yesterday. This name is not out of the woods and, as I wrote in a note yesterday, I believe that the preannounced comps for 2QFY11 flattered to deceive.
- DIN continues to underperform, declining on strong volume yesterday. EAT, BJRI, CAKE, and RT all gained (with EAT trading on strong volume).
- YUM traded higher on accelerating volume.
Howard Penney
Managing Director