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With a jolt from Starbucks, Nasdaq scores 11th straight gain

July 22, 2009 |  4:25 pm

Modest selling in some blue-chip stocks today ended the Dow Jones industrial average's winning streak at seven sessions, but the Nasdaq composite stretched its streak to 11 straight gains -- the longest such spell since 1996.

Nasdaq got a lift from some of the usual technology suspects, including Apple Inc., which jumped $5.23, or 3.4%, to a 10-month high of $156.74 after its better-than-expected earnings report late Tuesday.

But Starbucks Corp. also gave Nasdaq a big boost. The java retailer’s shares soared $2.70, or 18.4%, to $17.39 -- the biggest one-day gain since the firm went public in 1992, according to Bloomberg News data -- after Starbucks said late Tuesday that cost-cutting helped fiscal third-quarter earnings beat analysts’ estimates.

The stock has more than doubled since falling to $7.17 last November -- when the deepening recession left investors wondering whether the nation would swear off Caramel Macchiatos forever.

Starbucks Starbucks’ sales remain depressed: Same-store revenue was down 5% in the quarter ended June 28 from a year earlier. But that was an improvement from the 8% drop in the previous quarter.

Wall Street expects the company to resume profit growth in fiscal 2010 (beginning in October). Analysts’ mean estimate is for operating earnings of 88 cents a share next year, up from an estimated 75 cents in fiscal 2009.

At the current stock price of $17.39, the shares are priced at about 20 times the 2010 estimate, compared with an estimated 2010 price-to-earnings ratio of about 15 for the Standard & Poor’s 500 index.

What about the threat from McDonald’s Corp.’s new McCafe coffee drinks?

On a conference call with analysts late Tuesday, Starbucks Chairman Howard Schultz asserted that the company was helped -- not hurt -- by new coffee-marketing campaigns from McDonald’s and other rivals.

From Schultz:

"What I’m saying is that during the quarter, we experienced a level of unprecedented investments in advertising by a whole host of companies, really raising a level of awareness and trial into the category. And as a result of that ... coupled with our own message ... we benefited from that.

"And I think sometimes people forget that despite the 50-plus countries and the thousands of stores that we have, that we have less than 10% share of U.S. coffee consumption and less than 1% share of coffee consumption outside of North America. So the size of the prize is still very large for Starbucks, and the level of awareness that has been created has been a benefit to us."

McDonald's might like to know:  Have you or anyone you know pulled into a Starbucks location after hearing a McCafe ad on the car radio?

-- Tom Petruno

Photo credit: Lisa Poole / Associated Press