Ask Matt: How long can Starbucks stay hot?

Matt Krantz | USA TODAY

Show Caption Hide Caption Starbucks Cafe success not reflected by stock In call with financial analysts Starbucks CEO said the corporation is playing the long game despite sluggish profit growth. While addressing a slump in fiscal forecasts Howard Schultz spoke of the recent successes the coffee chain has experienced.

Q: How long can Starbucks stay hot?

A: Starbucks is best known for its piping hot coffee. But investors know it as a great - if not richly valued - stock.

Shares of the coffee giant have been a stellar investment for long-term investors. The stock is up nearly 340% over the past five years, a strong showing relative to the 77% gain in the Standard & Poor's 500 during the same period. The stock also yields 1%, which is an added kicker, although that is half of the yield of the market.

The company continues to deliver. Starbucks late Thursday reported an adjusted quarterly profit of 43 cents a share, which matched expectations. Revenue jumped 18% from the same year-ago period. Starbucks is not a cheap stock, though, as it trades for 35 times diluted earnings the past year. That's well above the market's multiple of roughly 20 times earnings. Starbucks is growing more rapidly than the market, explaining why Wall Street analysts on average rate the stock a "buy." Starbucks is expected to deliver average annual compound growth of 18%. The company's growth plans continue to keep investors interested, but analysts see shares worth $63.96 in 18 months, which is just 2% upside from Thursday's close of $62.50.

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.