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$14.93 -0.49 (-3.18%)
7/24/2008 9:42 AM

Starbucks Corp (SBUX)

CAPS Rating:
**

Purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, coffee-related accessories and equipment primarily through its operated retail stores.

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Recs

5

Avatar briancm (< 20) Submitted: 10/10/06 5:43 PM : Underperform Start Price: $37.80 SBUX Score: 54.97

SBUX is currently trading at 42.7 times 2007 earnings expectations. The company is growing EPS at 22% per year. This number will only get smaller as Starbucks continually gets closer to saturation of their market. The company would have to continue growing EPS at 22% a year until mid 2011 before trailing EPS gets down to 20 assuming stock price remains unchanged. What is most likely to happen is growth will slowly dip into the high teens and this stock will slide down in price until growth rate more matches it's valuation. I think within a couple years this stock will fall to around $25 a share not due to bad company fundamentals but due to current over-valuation.

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