Starbucks Turnaround Surprises -- Now What?

BOSTON (TheStreet) -- Starbucks SBUX, left for dead by analysts during the recession, surprised even its own investors. Starbucks shares have gained 34% this year, four times that of the S&P 500 Index. Starbucks is pricey. The Seattle-based company's fiscal fourth-quarter profit surged 86% to $279 million, or 37 cents a share, as sales grew 17% to $2.8 billion. The operating margin widened from 9.3% to nearly 13%. Comparable-store sales, the critical metric for restaurant operators, climbed an impressive 8%, boosted by a 5% increase in traffic and a 2% rise in average bill. The company repurchased 4.5 million shares during the quarter and announced a dividend of 15 cents, converting to a 1.7% annual yield and a 41% payout ratio. Not long ago, Starbucks was being panned by investors for overexpansion and strategic mismanagement as java-juniors Peet's Coffee & Tea PEET and Green Mountain Coffee Roasters GMCR were being hyped. Now, with its restructuring phase complete -- Starbucks took its final $6.4 million charge for lease-exit and other closure-related costs during the quarter -- the company is back in vogue. The name of the game for Starbucks and many other consumer-oriented brands is international expansion. The middle class is stagnating in the U.S., but newly wealthy citizens in burgeoning overseas economies are transforming into a dominant class of consumers. Starbucks' quarterly international revenue stretched 21%. U.S. sales rose 15%. To read the rest, head over to TheStreet.com