Photo By rudolf_schuba
I’ve been eyeing SBUX since they started to fall below the $18 range back in February. It’s a well-run company, has an addicting product that keeps people coming back, and has a strong leadership team. Now they are at $9.86, which is almost at their 52-week low of $9.16. Today they reported forth quarter results that included:
- $5.4 Million in earnings (compared to $158.5 million a year earlier)
- Earnings of 1 cent a share (compared to 21 cents a year earlier)
- Profits falling 97 percent.
Let’s diagnose SBUX, based on what I believe as the 3 most important aspects of evaluating a stock: P/E, Dividend, and current price compared to 52-week high/low.
SBUX Diagnosis:
P/E: 15.73. Still a little high. I would like to see this more in the 10 range for a retailer and beverage company. Given the economy, and tight fists on peoples’ money, I believe SBUX will find it harder and harder to sell their product. They still need to close more stores, and cut costs, to get this number down.
Dividend: N/A. Apparently SBUX doesn’t have enough profits, or have simply chosen to not, issue dividends. This alone would keep me away from SBUX. Again, they need to cut costs, and be able to provide a dividend before I pull the trigger.
Current Price vs. 52-Week High / Low: $9.86 vs. $24.40/$9.16: This is the only real plus I see. The current price is so far below the high, and only somewhat above the 52-week low. Could this be the bottom? With the stock price falling 52% in 2008, this number looks very tempting.
Bottom Line: With 2 out of 3 against the purchase, I would say it’s best to wait on SBUX until some costs have been cut, the P/E is a little lower, and they are able to issue dividends.
Note: this is only my opinion, and in no way should be considered professional, financial advise.
Related posts:
|
|||
Leave a Reply |
|||
|
|
