Back to top

Analyst Blog

Coffee giant Starbucks Corporation (SBUX - Analyst Report) recently announced that it will open a store in Vietnam next month in partnership with Hong Kong Maxim’s Group.

Starbucks has granted a license to Maxim’s subsidiary, Coffee Concepts (Vietnam) Limited, to run a store in Vietnam’s Ho Chi Minh City, making Vietnam the 12th market to boast a Starbucks store in the China Asia-Pacific (CAP) region.

The Starbucks brand is gaining popularity with consumers across Asia as the company continuously expands its store base outside U.S.  Management believes the China Asia-Pacific (CAP) region will drive significantly larger business growth over the next five years.

Following the strong performance in fiscal third quarter 2012, this region has produced strong double digit comps for 10 consecutive quarters now. Specifically, Starbucks' business in China is rapidly growing and the region is expected to become the company’s second-largest market by 2014. The company is looking to take the store count in this region to 1,500 in 70 cities by 2015.

Other than that, the company runs a decently profitable business in Japan and hopes to have more than 700 stores in Korea over the next four years. In October last year, Starbucks entered the lucrative Indian market with its first three store openings in Mumbai. The company-operated stores were opened in joint venture with Tata Global Beverages Limited. The CAP segment is expected to have 4,000 stores by the end of 2013, of which 1,000 will be in Mainland China, 1,000 in Japan and 500 in Korea.

Our Recommendation

We currently have a long-term Neutral recommendation on Starbucks. However, the stock carries a Zacks #2 Rank (short-term Buy rating).

Starbucks is gaining momentum following the solid results in fiscal 2012; regular product innovations like the at-home coffee machine, Verismo; and great strategic deals like La Boulange, Evolution Fresh and Teavana.

Starbucks competes with McDonald’s Corp. (MCD - Analyst Report) which carries a Zacks#3 Rank (short term ‘Hold’ rating).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
FELCOR LODG… FCH 10.47 +3.46%
OLD DOMINIO… ODFL 63.48 +1.18%
VASCO DATA… VDSI 13.57 +0.67%
AMEDISYS IN… AMED 20.18 +0.10%
LENOVO GROU… LNVGY 27.07 +0.04%