Wednesday, September 9, 2009

(Expensive) Insider Buying at Starbucks (SBUX)

AlphaNinja - Starbucks (SBUX) director Javier Teruel picked up 12,900 shares in the open market yesterday, about a quarter million dollar bet on the company's continued fine performance.

I certainly would not follow his lead with SBUX shares trading at $20.00. An aggressive estimate for net income in 2010 would be $740million, about 5% of Starbucks' market value. Due to expansion-related capital expenditures, Free Cash Flow will be even less, pointing to a FCFY (Free Cash Flow Yield) of well under 4%. No thanks.

In a related note, my favorite clip ever regarding Starbucks:

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