Starbucks (SBUX) delivered an incredible quarter.  The company posted a significant increase in traffic trends, a trend which requires us to remove Starbucks from our SHORT bench.


This was short lived skepticism for us as we were looking for a downward trend in traffic, lower adoption rates of Mobile Order & Pay, and a decrease in food sales, all of which did not occur. SBUX posted yet another record quarter of performance in 3Q15 reporting yesterday after the close, beating estimates across the board. Q3 revenue was $4.88B versus consensus estimates of $4.87 a 17% increase YoY. Comparable same-store sales (SSS) increased +7% compared to estimates of +6.1%, a 300 basis point increase YoY. Of the consolidated numbers, the Americas segment reported +8% SSS versus consensus of +6.3%, EMEA reported +3% versus consensus of +3.8% and CAP reported +11% versus consensus of +8.5%. Reported EPS ex-items for Q3 was $0.42 versus consensus of $0.41.


As you can see the strong performance was global, with no region disappointing. The growth seen in transactions is possibly the most impressive in the quarter, given the number of stores they have, as they are adding stores cannibalization does not seem to be an issue. Two year traffic trends in the Americas segment are turning positive, evidenced by the chart below:




This is truly one of the best run company’s not only in the restaurant sector but in the world. Management’s great execution across platforms is testament to their long-term strength. And although we are not chart chasers so therefore will not recommend a buy at these levels, we certainly can’t short it here either.


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more