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On Tuesday, July 21, brewing behemoth Starbucks (NASDAQ: SBUX) bested Wall Street earnings estimates for the second quarter. The Seattle-based coffee giant reported earnings of $151.5 million in the period, driven by cost-cutting efforts and the downsizing of underperforming stores. Starbucks has now closed at 676 U.S. locations and almost 100 abroad.
For years, Starbucks was the darling of Wall Street. It seemed to do no wrong. The shares vaulted from less than 70 cents a piece in 1992 to $40 by 2006. But Starbucks wasn't managing its growth very well, and they opened too many stores far too quickly. As a result, shareholders paid the price.
Now, however, the company is starting to see the fruits of that cost cutting, and Wall Street is responding positively to the news. Shares were bid up agressively immediately following the company's earnings announcement of 24 cents per share.
I rate SBUX a B, or buy. Not quite as strong as the other four coffee stocks, but still a cup worth sipping from.
Don't miss the complete list of coffee stocks.
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At the time of publication, Louis Navellier owned shares of SBUX in personal or client portfolios.
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