Starbucks Cools the Crowd

Updated from Nov. 10

Starbucks (SBUX Quote - Cramer on SBUX - Stock Picks) reported a nearly 50% gain in fourth-quarter net income, but the company's mere reiteration of fiscal 2005 guidance seemed to cool investors after the bell.

The company's shares were recently down 93 cents, or 1.7%, to $54.36 in early Thursday trading.

In its quarter ended Oct. 3, the coffee chain earned $103.34 million, or 25 cents a share. In the year-ago period, the company earned $69.6 million, or 17 cents a share.

Sales jumped 34% from the year-ago period to $1.45 billion in the quarter.

Both Starbucks' sales and its earnings were boosted by an extra week in the quarter, compared with last year. The extra week added about $125 million in revenue and about 3 cents a share to the company's bottom line.

Analysts polled by Thomson First Call were expecting Starbucks to earn 25 cents a share. The company's previous guidance implied earnings of 24 cents to 25 cents a share in the just-completed quarter.

For its current fiscal year, Starbucks reiterated its previous guidance of $1.12 to $1.15 a share in earnings on revenue growth of about 20%.

But that forecast is below Wall Street's expectations. Analysts have forecast that Starbucks will earn $1.16 a share in fiscal 2005, on $6.27 billion in sales.

Given the company's pricey multiple, investors may expect Starbucks to continually up its earnings outlook, company CFO Michael Casey acknowledged on a conference call with investors and analysts.

"Since we only have one month into the new fiscal year, we believe it is premature to raise our targets at this time," Casey said.

While the company had much to crow about in its just-completed quarter, investors might have found other trouble spots beyond the company's guidance.

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