Starbucks Corporation (SBUX): Today's Featured Services Laggard

Editor's Note: 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.

Starbucks Corporation ( SBUX) pushed the Services sector lower today making it today's featured Services laggard. The sector as a whole closed the day down 0.4%. By the end of trading, Starbucks Corporation fell 60 cents (-1.1%) to $52.64 on light volume. Throughout the day, 3.4 million shares of Starbucks Corporation exchanged hands as compared to its average daily volume of 8.7 million shares. The stock ranged in price between $52.62-$53.27 after having opened the day at $52.98 as compared to the previous trading day's close of $53.24. Other companies within the Services sector that declined today were: Promotora de Informaciones SA/FI ADR ( PRIS), down 14.5%, Ambow Education ( AMBO), down 11.3%, Command Security Corporation ( MOC), down 10.5%, and Swisher Hygiene ( SWSH), down 8.6%.
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Starbucks Corporation operates as a roaster, marketer, and retailer of specialty coffee worldwide. As of September 30, 2012, the company operated 9,405 company-operated stores and 8,661 licensed stores. Starbucks Corporation has a market cap of $39.51 billion and is part of the leisure industry. The company has a P/E ratio of 29.7, above the S&P 500 P/E ratio of 17.7. Shares are up 15.5% year to date as of the close of trading on Thursday. Currently there are 19 analysts that rate Starbucks Corporation a buy, no analysts rate it a sell, and seven rate it a hold.

TheStreet Ratings rates Starbucks Corporation as a buy. 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, good cash flow from operations, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the services sector could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the services sector could consider ProShares Ultra Short Consumer Sers ( SCC).

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