My latest column is up at RealMoney.

I wonder why Orient Express commands higher multiples than safer peers in the current market.

Orient Express has been spending heavily over the last few years to grow its business. In 2007, the company generated $52 million in cash flow from operating activity, yet it spent $121 million investing in new capital. In each of the last three years, the company has had to raise as much as $135 million by issuing new debt, issuing more shares or tapping into working capital facilities. If access to financing is curtailed or becomes more expensive, as is likely, the growth efforts may have to take a back seat until the economy mends. That would likely result in additional steep cuts to estimates.

Starwood, meanwhile, can plug along with its expansion plans without needing access to outside financing. Its free cash flow has been positive in each of the last three years, and it amounted to $511 million in 2007. The approximate 5% free cash flow yield is not the best I’ve seen, but it is nearly twice the current yield on five-year Treasuries. More important, it provides a cushion against any operational slowdown that might rear its head.

With both companies expected to grow their earnings in the mid-20% range next year, I can’t see paying a higher multiple for the riskier stock. If Orient Express were to trade at Starwood’s P/E multiple on 2009 earnings, it would fall by another 33%, to $30. Meanwhile, I believe Starwood would be justified in maintaining its current free cash flow yield. If free cash flow grows in line with expected earnings, it could rise 23% to $67.50.

Disclosure: At time of publication, William Trent has no positions in the companies mentioned.

Sometimes it is easy to get too caught up in a few related names and not see what is going on in the broader economy. With the concerns over consumer spending, we decided to look at a few companies that might have a glimpse into the consumer spending habits. Not wanting to get too caught up in a particular segment (luxury vs. discount, for example) we picked from recent conference call reports to find companies that provide primarily small luxuries or large-ticket items. Here’s what they have to say.

AutoNation (AN) says the housing market weakness is spilling over into auto sales.

We attribute our underperformance to the industry to the weighting of our business in California and Florida.

To reiterate Mike Jackson’s earlier point, our business in these two states accounts for 50% of our unit sales as compared to 20% for the industry at large. CNW estimates that California and Florida combined were down approximately 13% for the industry. Our decline for these two states combined was in line with the industry.

We anticipate the softness in California and Florida will continue as their housing markets struggle. With reduced volume having an impact on all segments of our business, work on controlling variable expenses, specifically advertising and compensation, along with aggressive inventory management takes on increased importance.

(Excerpt from full AN conference call transcript)

But it is not affecting jewelry, according to Blue Nile (NILE).

I think it is quite a statement about the stature of the Blue Nile brand that so many people trust us with such exceptional purchases. Some of the most impressive sales this quarter included a 5-carat engagement ring for $140,000 and a 6.5-carat pair of diamond earrings for $130,000. Our most memorable order during the quarter was a $195 garnet pendant that was shipped to a customer in Texas in late March. This order was very special to us because as it shipped, the company passed $1 billion in cumulative revenue since the inception of the company less than eight years ago. This was a tremendous milestone for the company, and I want to congratulate all of our employees on this accomplishment.

(Excerpt from full NILE conference call transcript)

Caffeine addicts also appear unfazed, spending a bit more and a bit more frequently according to Starbucks (SBUX).

We opened 147 new stores during the quarter, bringing our store count outside the U.S. to nearly 4,000 locations in 38 countries. And we delivered comparable store sales growth of 7% — 5% transaction, 2% ticket.

(Excerpt from full SBUX conference call transcript)

Hilton (HLT) says people are still staying in nice places.

For the entire company, things are going really great. Our fee business is strong. Our development pipeline is the strongest in the industry. Big cities like New York and Chicago are in high demand. Our group business for the remainder of this year and through 2008 looks very good and the core time share business is performing very well.

(Excerpt from full HLT conference call transcript)

And things are so good for Coach (COH) they are turning away business.

Before we get into the financial highlights of the quarter, I want to briefly touch on the closure of our small corporate accounts business through which Coach sold products to distributors for corporate gift-giving and incentive programs. As noted in the press release, we have decided to cease operations of this business in order to better control where our product is ultimately sold. Simply put, our goal is to curtail diversion of our product into non-image-enhancing environments such as the warehouse retailers and the discount chains.

Now, I would like to discuss the outstanding results of our continuing business. We just announced a sales increase of 30%, and a 50% increase in earnings per share for the quarter just completed on a continuing basis. It’s worth noting that this was the 21st consecutive quarter that Coach achieved sales growth of at least 20%.

(Excerpt from full COH conference call transcript)

So there you have it. By a 4-1 margin it is very hard to see signs that the consumer has slowed down. At least not yet.

Disclosure: Author is long Starbucks (SBUX) at time of publication.