Thursday, December 6, 2007

Starbuck Follow-Up/News

The stock price continues to decline for Starbucks. Now at $22.50 and the P/E still at 26. Still a long way to go before the price makes business sense.

Today news came out about a problem with their thermos coffee cups burning people when the handle fails. Reminds me of a Seinfeld show.

This won't help the stock price.


Anonymous said...

Canadian Money,

At what price would SBUX make business sense? Today it broke under the 20 dollar mark before finishing up at 20.03.

Anonymous said...

I view the P/E as a secondary indicator. A red flag that a stock is approaching a point where a large correction could occur at any time.

A P/E of 26 is too high and not sustainable for ever. That doesn't mean that at times people have not bid up a stock to a P/E of 100 or more during market bubbles.

Not sure if there is a definition for a reasonable P/E - perhaps closer to 10. Warren Buffet might say...a P/E less than 1 would be a "steal" if the business fundamentals were good.

ps. never realized how cumbersome it was to leave a comment on this blog.

Canadian Money said...

Update: Oct. 10, 2008

I see Starbucks stock is trading near $10. Still too expensive.