Starbucks, Tablets, and Disappointment from an IPO Darling
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
With fresh economic news indicating that China's economy is still slowing, the major U.S. indexes are heading south today. As of 1:15 p.m. EST, the Dow Jones Industrial Average is down 22 points, or 0.14%, while the S&P 500 and the Nasdaq have respectively lost 0.15% and 0.10%.
A few individual companies are also heading lower today. Let's see why.
Shares of Starbucks are trading lower by more than 3% after ITG analyst Steve West gave the coffee company a poor outlook. West believes Starbucks' momentum is slowing after two strong quarters. He also believes that while the company will continue to grow through innovative product offerings and higher traffic, U.S. same-store sales growth in 2014 will be between 5% and 6%, below the consensus estimate of 6.6%. Furthermore, West said his channel checks showed slower traffic at stores in October and November compared to September. As I have said before and surely will say again, this is one analyst's opinion and investors shouldn't jump ship simply because of what one person says. Take this with a grain of salt and remember that West is not likely looking at the big long-term investing picture, but simply what Starbucks may do in the next quarter or year.
Another food company making news today is DineEquity . Although the company initially announced plans last week to have tablet computers at all Applebee's restaurant tables for ordering food and paying, CNBC picked the story up this morning and interviewed CEO Julia Stewart, which helped to open this story up. Shares of DineEquity are down 2% at this time, as shareholders may see more downside risk to this idea than potential profit. While the company doesn't plan to cut staffing due to the new computers, there doesn't seem to be a huge return on investment. Sounds like a big cash burn to me.
Lastly, shares of Burlington Stores are down 10% after the company reported earnings earlier this morning. This was the first earnings release since the company went public back in October and it didn't go as well as many investors were hoping. The company reported a quarterly loss of $16.9 million, up 128% from this quarter a year ago. But the company did say $10.5 million of that loss was due to the IPO and expenses related to debt. For a stock that was on fire since going public and trading at a price-to-earnings ratio of more than 43, the company needed to perform perfectly, which it clearly did not.
More Foolish insight
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!
The article Starbucks, Tablets, and Disappointment from an IPO Darling originally appeared on Fool.com.
Fool contributor Matt Thalman owns shares of Starbucks. Check back Monday through Friday as Matt explains what causing the big market movers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.