Coffee company, Starbucks Corporation SBUX recently announced the pricing of senior notes worth $500 million due 2022 and $350 million due 2045. The $500 million offering carries an interest rate of 2.700%, while the $350 million offering carries an interest rate of 4.300%. The offering is expected to close on Jun 10, 2015.
Starbucks intends to use a part of the net proceeds for the redemption of outstanding 6.250% senior notes due 2017. The remaining net proceeds would be used to meet other general corporate expenses, which may include dividend payments, repurchase of common stock under the ongoing share repurchase program, funding any future acquisitions and other business expansion.
The U.S. coffee chain is probably enjoying a golden period. Starbucks enjoys healthy fundamentals — strong global retail footprint, successful food/beverage innovations, best-in-class loyalty program and digital offerings, rapid growth in international markets and consistently impressive Channel Development segment (CPG) growth.
The Zacks Rank #3 (Hold) stock delivered strong performance in both the quarters of the first half of fiscal 2015 and is poised well for the second half as well. Strong top-line performance backed by a range of sales drivers and various cost saving initiatives should boost earnings in the second half of 2015. Digital efforts like mobile order/pay and delivery services, strong food sales, beverage innovation, lunch and evening program and Teavana tea can fuel stronger sales trends in fiscal 2015.
Better-ranked restaurateurs include BJ's Restaurants, Inc. BJRI, Zoe's Kitchen, Inc. ZOES and Ruby Tuesday, Inc. RT. All these stocks sport a Zacks Rank #1 (Strong Buy).
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