This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Investors Love Starbucks: Howard Schultz

NEW YORK ( TheStreet) - It hasn't even been a year yet since I added Starbucks (SBUX - Get Report) to the list of names I cover. Yet, every time I hear CEO Howard Schultz's public comments, I like many in the stock market, start to swoon.

This guy has a way of soothing fears that goes a long way when investors consider a stock.

Starbucks' shares, despite a less-than-perfect earnings report on Thursday, were rising 3.1% to $75.63 at last check.

Brian Sozzi, CEO and chief equity strategist of Belus Capital Advisors said Friday's share price move is "a result of the Howard Schultz's charm."

Must Read: Polar Vortex is the Latest Bad News for 4Q Retail

"He does a strong job of focusing on the positive and making sure the Street buys into the positive," Sozzi wrote in an email. "The key positive today: quotes on the dollars loaded on Starbucks card and the image conveyed of it all being unleashed on Starbucks stores in second quarter, driving a monster quarter and full-year guidance raise." Sozzi rates the company at "hold."

Late Thursday, Starbucks' first-quarter earnings of 71 cents a share beat consensus by 2 cents. Revenue rose 12% to $4.24 billion, however Wall Street was expecting more, looking for $4.29 billion.

Same-store sales in the U.S. also missed consensus expectations for the December-ending quarter, coming in at 5%, versus expectations of 6.4%. It was clear that even darling Starbucks felt some of the same troubles that many retailers felt during the holiday season.

"Holiday 2013 was the first in which many traditional brick-and-mortar retailers experienced in-store foot traffic give way to online shopping in a major way," Schultz said. "As our solid traffic growth and record Q1 results demonstrate, Starbucks unique combination of physical and digital assets positions us as one of the very few consumer brands with a national and global footprint to benefit from the seismic shift underway."

Starbucks continued to play up its embracing of the digital consumer through its mobile technology and growing loyalty card base. Starbucks said dollars loaded on Starbucks Cards globally reached $1.4 billion in the quarter.

Starbucks also upped its earnings forecast for the fiscal 2014 year to a range of $2.59 to $2.67 from $2.55 to $2.65, previously.

In Sozzi's latest commentary for TheStreet, as much as the market may love Schultz, it's important to check your biases at the door when making an investment.

He points specifically to the slowing transaction growth in the company's Americas segment, that may have "surfaced because of the 'seismic' shift in how people consumed goods ... or from store operating issues born from an expanding menu (denied by the company)," is a development that "is not factored into the valuation on a publicly traded Starbucks," Sozzi wrote in an article on TheStreet on Friday.

He also was surprised that Starbucks had to resort to in-store promotions to get customers in the door last month.

Despite concerning trends, Wall Street still loves this stock.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SBUX $59.04 1.65%
AAPL $110.78 0.36%
FB $94.01 2.11%
GOOG $641.47 2.32%
TSLA $246.15 -0.57%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs