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Following SBUX’s all-star quarter in 4Q13, the company appears to be firing on all cylinders heading into FY14.  A strong commodity tailwind, international growth, the beginning of a recovery in the EMEA segment, and expansion into new segments of the global food and beverage industry are all long-term bullish factors moving forward. 

The only slight negative stemming from what was, overall, a bullish conference call last quarter was management reigning in expectations for FY14 -- especially expectations for same-store sales in the Americas.

Our recent store visits in the Northeast suggest that the holiday season has not been as robust as the company anticipated.  We believe the trickle-down effect on slowing same-store sales are not yet fully reflected in the current share price.  Considering earnings for 2014 are likely to be revised down slightly and valuation is close to a 3-year high, we see some downside in the stock.

Starbucks is a great company with a strong and feasible long-term strategy.  That being said, we expect to see the stock adjust accordingly to slower revenue growth in the early innings of 2014.

SBUX: LOSING A LITTLE MOMENTUM? - SBUX AMERICAS

 

SBUX: LOSING A LITTLE MOMENTUM? - SBUX EMEA

 

SBUX: LOSING A LITTLE MOMENTUM? - SBUX CAP

 

SBUX: LOSING A LITTLE MOMENTUM? - EEG

Howard Penney

Managing Director