Starbucks' (SBUX) - Get Report shares tumbled 8% on Aug. 3 after the company reported solid third-quarter results but weaker-than-expected July same-store sales growth. The company's CFO infamously attributed the shortfall to record high temperatures that led to increased orders for Frappuccinos -- an ice-blended drink that requires more time to serve.

But is this the real reason for the 35% misstep in same-store sales, or is one of America's great growth companies showing signs of maturing? My research suggests weather isn't Starbucks' only problem, and that when it comes to the coffee peddler's stock, investors should

not

consider doing it.

Starbucks' reasoning for the same-store miss came under scrutiny from analysts and investors. When a company reports results that are short of estimates, the numbers are usually attributed to less demand. Some questions that merit an answer: Does Starbucks actually monitor consumer

non

-purchases? Since Frappucinos are one of the most expensive items on the menu, wouldn't that

boost

same-store sales?

Looking past management's comments, I believe Starbucks is becoming a victim of its own success. Starbucks operates more than 11,000 stores globally (5,231 in the U.S., 1,325 in international markets and 4,821 licensed stores worldwide) and plans on opening an additional 2,000 stores in fiscal 2006. Management expects annual total net revenue growth of approximately 20% and annual earnings per share growth of approximately 20% to 25% for the next three- to five-year period.

To achieve this growth, sales would have to total almost $19 billion by 2010 on a compounded basis from its $7.5 billion sales for fiscal 2005. This seems very difficult, given the current economic landscape of rising energy prices and higher interest rates.

Starbucks remains adamant that these macro headwinds will not have a significant impact on sales. But after earnings shortfalls from

Whole Foods Market

(WFMI)

and

Hansen Natural

(HANS)

, two other high-growth consumer-goods companies, I see reason to worry.

Starbucks' aggressive growth into international markets is seen as a positive and has been well publicized. But this could also have a negative effect on the stock, because most of the countries in which Starbucks intends to open stores are experiencing turbulent economic conditions.

Central banks in China, Russia and India, three countries that Starbucks is aggressively targeting for new stores, all have raised interest rates over the past few months due to inflation and rising oil prices. Japan, which is Starbucks' second-largest market based on store count, just raised interest rates for the first time in six years, and the European Central Bank also tightened in hope of curtailing inflation.

Starbucks' growth strategy has been challenged by analysts and investors since 1992, only to leave those doubters in awe. But this time around, I believe the sales miss should serve as a warning that the days of 10% same-store increases could be things of the past for the company. At the current price, Starbucks sports a forward price-to-earnings ratio of 34.4, more than double the

S&P 500

average P/E of 16.

Over the long term, I don't see Starbucks achieving its sales forecast even if we enter a declining interest-rate environment (or even if management whips up a 10-second Frappuccino machine). For the short term, I wonder if August same-store sales also will be weaker than expected, because the average temperature so far has been higher than that of July.

Should you consider investing in Starbucks? I see much more risk than reward, so the answer is "no."

In keeping with TSC's editorial policy, Frank Curzio doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Frank X. Curzio is a research associate at TheStreet.com, where he works closely with Jim Cramer. Previously, he was the editor of The FXC Newsletter and senior research analyst for Greentree Financial.

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