I put together a model with some single digit sales growth and nominal
margins going forward. It seems that they are worth more like $24 to
$25. If recent price increases and lower milk prices have more impact
than my assumptions, shares could be worth more.
If you want to see the numbers, I posted them at:
invalueable.net/forum/view/493

All the short arguments seem emotional and hopeful rather than based
on some long-term business impairment. P/E ratios don't help much when
companies have gone through a period of write-offs that distort
earnings. SBUX closed unprofitable stores that were likely stealing
business away from close by stores rather than serving new customers.
This usually impacts profits over a few quarters and then improves
margins by reducing SG&A overhead.I adjusted SG&A down just slightly
in the future having it return to historical averages.

SBUX is worth only what someone will pay for it as is their coffee,
Closing unprofitable locations will indeed help the bottom line. The
reason so many stores were opened was because SBUX believed there was
an almost bottomless pit of suckers willing to part with their money.
Now SBUX believes that opening new stores and deceiving the public
into believing they are other than Starbucks is part of a growth
strategy. It will backfire.
Starbucks has been swept upward with most stocks because the public is
buying the recovery mantra. It's another bubble in the making. If it
was not the dry bulk index and airline and shipping stocks would be
moving up in step with the Dow. They are not because this stock market
rally is hollow and doomed to fail. Just like the strategy employed by
Starbucks to open new stores with deceptive names is doomed to fail.
On Sep 9, 8:48 am, Steve <spend...@gmail.com> wrote:

All the short arguments seem emotional and hopeful rather than based
on some long-term business impairment. P/E ratios don't help much
when
companies have gone through a period of write-offs that distort
earnings. SBUX closed unprofitable stores that were likely stealing
business away from close by stores rather than serving new customers.
This usually impacts profits over a few quarters and then improves
margins by reducing SG&A overhead.I adjusted SG&A down just slightly
in the future having it return to historical averages.

"P/E ratios don't help much when
companies have gone through a period of write-offs that distort
earnings."

Whoa, whoa, whoa hwhat??
The only distortion is that SBUX earnings were distorted up!! As in if
you save a cost one time your earnings will look better only that one
time. That's exactly what they did. Next year when they have already
leaned down, there will be nothing to cut to boost profits!!  Which is
why having a P/E ratio this high is even more lucrative. A P/E ratio
over 30 tends to mean rapid growth or widespread belief of growth to
be in the future. Starbucks is closing stores. Starbucks is cutting
costs just to make a profit. So it is actually at the exact opposite
and should be trading around 15 times earnings (or lower), because
growth looks unlikely.

If you had the market cap, and you bought starbucks it would take 61
years to get your money back. (when you throw in time value of money,
it would cost far far far longer probably over 100 years) Needless to
say 100 year payback period is awful, and so is this stock's price.

On Sep 9, 10:48 am, Steve <spend...@gmail.com> wrote:

We have just started a penny stock trading group.

We are dedicated to finding undervalued stocks and bringing them the
attention they deserve.

If you want to join us and share ideas please email me with your area
of expertiese and other basic info. Hope to hear from you soon.

 -ClockWrk

30dki2smsms