"In an constant effort to keep what I think are our best ideas fresh, I think Restaurants analyst Howard Penney's bearish view on SBUX is more compelling than DRI," writes Hedgeye CEO Keith McCullough. "Both are shorts – I just think SBUX is a better one."
Below is a brief excerpt from a recent institutional research note written by Penney:
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"We are staying SHORT Starbucks. The company reduced its long-term growth algorithm, but left 2018 EPS estimates unchanged. The announcements the company made yesterday raised the noise in the P&L for 2018. The increased noise level will make it hard to get a true read on how the business will look in 2019 and beyond. It also suggests that the stock will trade at a lower multiple for the time being. While there are a number of moving pieces to the SBUX recovery story, the investment thesis now boils down to this: “We'll have accelerating profitability as we move throughout the year” Scott Maw, CFO, Starbucks All of the initiatives the company talked about yesterday will take time to unfold and some are not new, but are rather recommitments to an old philosophy." |