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: