Starbucks Corporation Stock Buy Recommendation Reiterated (SBUX)

NEW YORK (TheStreet) -- Starbucks Corporation (Nasdaq:SBUX) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

• ACTIVE STOCK TRADERS: Check out TheStreet's special offer for Real Money, headlined by Jim Cramer, now!

Highlights from the ratings report include:

• SBUX's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 14.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• SBUX's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.
• Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.71% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SBUX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
• STARBUCKS CORP has improved earnings per share by 17.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STARBUCKS CORP increased its bottom line by earning $1.62 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.62).
• The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Hotels, Restaurants & Leisure industry average. The net income increased by 18.5% when compared to the same quarter one year prior, going from $261.50 million to $309.80 million.

Starbucks Corporation purchases and roasts whole bean coffees. It operates 6,705 company-operated stores and 4,082 licensed stores in the United States; and 2,326 company-operated stores and 3,890 licensed stores in Canada, the U.K., China, Germany, Thailand, and internationally. The company has a P/E ratio of 30.1, equal to the average leisure industry P/E ratioand above the S&P 500 P/E ratio of 17.7. Starbucks has a market cap of $39.51 billion and is part of the services sector and leisure industry. Shares are up 13.2% year to date as of the close of trading on Friday.

You can view the full Starbucks Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

For more information on Starbucks Corporation click any of the following:

• Starbucks Corporation Stock Price

• Starbucks Corporation Analyst Ratings

• Starbucks Corporation Key Stats & Profile

• Starbucks Corporation Earnings

• Starbucks Corporation Ratio Comparison

• Starbucks Corporation Growth Rates

• Starbucks Corporation Balance Sheet

• Starbucks Corporation Cash Flow

• Starbucks Corporation Income Statement