Starbucks: Still prefer SBUX over MCD
Oppenheimer continues to favor SBUX (Outperform) over MCD (Perform) into next week's results and beyond. While MCD contains limited valuation risk, the Street's sales/earnings estimates through '15 appear too optimistic which could keep the shares restrained. SBUX still has significantly more slack in its model with new internal drivers, fewer external risks and "lower-than-usual" sales/earnings expectations through '15—which gives investors a better opportunity for upside. While SBUX's 24x forward P/E is richer, firm believes comps will remain above average and the stock will continue to grow into its expanding EPS skin.
- SBUX is set to report 7/24 after the close
- MCD is set to report 7/22 before the open
