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Starbucks (SBUX) to Report Q4 Earnings: What's in Store?
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Starbucks Corporation (SBUX - Free Report) is set to report fourth-quarter fiscal 2016 results on Nov 3, after the closing bell. Last quarter, the company delivered in-line earnings.
Starbucks delivered positive earnings surprise in three of the last four quarters, with an average surprise of negative 0.01%.
Let’s see how things are shaping up prior to this announcement.
The company expects earnings in the range of 54 cents to 55 cents per share for the fourth quarter on a non-GAAP basis. This represents a growth rate of 26–28%.
Starbucks anticipates global comp growth of 5% for the quarter and mid-single-digit comp growth globally for fiscal 2016. Management also remains optimistic about a modest improvement in the U.S. in the quarter from the third-quarter levels. Starbucks’ same-store sales growth will likely be driven by breakfast sandwiches and its core brewed and espresso product lineup. During the quarter, the company launched its fall beverages, comprising the pumpkin spice latte, the chile mocha, the salted caramel mocha, Almondmilk and Nature’s Sweet.
Moreover, Starbucks launched its fall food line that includes the pumpkin cheesecake bar, the caramelized apple pound cake, dark chocolate and caramelized banana oatmeal.
Starbucks’ latest digital offering, Mobile Order and Pay, is witnessing increasing usage and could prove to be a key growth driver in the to-be-reported quarter as well as in 2016. This initiative allows customers to order in advance and pick up the items at their preferred Starbucks outlet, saving time in the process.
Earnings Whispers
Our proven model does not conclusively show that Starbucks is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Starbucks’ Earnings ESP is -1.82% as the Most Accurate estimate of 54 cents per share is lower than the Zacks Consensus Estimate of 55 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Starbucks’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive earnings surprise.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
AMC Entertainment Holdings, Inc. (AMC - Free Report) , with an earnings ESP of +3.57% and a Zacks Rank #3.
Michael Kors Holdings Limited , with an earnings ESP of +1.40% and a Zacks Rank #2.
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Starbucks (SBUX) to Report Q4 Earnings: What's in Store?
Starbucks Corporation (SBUX - Free Report) is set to report fourth-quarter fiscal 2016 results on Nov 3, after the closing bell. Last quarter, the company delivered in-line earnings.
Starbucks delivered positive earnings surprise in three of the last four quarters, with an average surprise of negative 0.01%.
Let’s see how things are shaping up prior to this announcement.
STARBUCKS CORP Price and EPS Surprise
STARBUCKS CORP Price and EPS Surprise | STARBUCKS CORP Quote
Factors to Consider
The company expects earnings in the range of 54 cents to 55 cents per share for the fourth quarter on a non-GAAP basis. This represents a growth rate of 26–28%.
Starbucks anticipates global comp growth of 5% for the quarter and mid-single-digit comp growth globally for fiscal 2016. Management also remains optimistic about a modest improvement in the U.S. in the quarter from the third-quarter levels. Starbucks’ same-store sales growth will likely be driven by breakfast sandwiches and its core brewed and espresso product lineup. During the quarter, the company launched its fall beverages, comprising the pumpkin spice latte, the chile mocha, the salted caramel mocha, Almondmilk and Nature’s Sweet.
Moreover, Starbucks launched its fall food line that includes the pumpkin cheesecake bar, the caramelized apple pound cake, dark chocolate and caramelized banana oatmeal.
Starbucks’ latest digital offering, Mobile Order and Pay, is witnessing increasing usage and could prove to be a key growth driver in the to-be-reported quarter as well as in 2016. This initiative allows customers to order in advance and pick up the items at their preferred Starbucks outlet, saving time in the process.
Earnings Whispers
Our proven model does not conclusively show that Starbucks is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Starbucks’ Earnings ESP is -1.82% as the Most Accurate estimate of 54 cents per share is lower than the Zacks Consensus Estimate of 55 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Starbucks’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive earnings surprise.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
AMC Entertainment Holdings, Inc. (AMC - Free Report) , with an earnings ESP of +3.57% and a Zacks Rank #3.
Masonite International Corporation (DOOR - Free Report) , with an earnings ESP of +1.43% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Michael Kors Holdings Limited , with an earnings ESP of +1.40% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>