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Starbucks (SBUX) to Report Q2 Earnings: What's in Store?
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Starbucks Corporation (SBUX - Free Report) is set to report second-quarter fiscal 2017 results on Apr 27, after the closing bell.
The coffee chain giant’s earnings were in line with the analysts’ expectations in the last reported quarter. In fact, Starbucks met expectation in three of the last four quarters and delivered a positive earnings surprise in the quarter ending Sep 2016, resulting in an average positive earnings surprise of 0.46%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Starbucks’s operating fundamentals remain strong with solid global retail footprint, successful innovations, best-in-class loyalty program and digital offerings. Particularly, Starbucks is strengthening its portfolio with significant innovation around beverages and core food offerings.
Again, a revamped customer loyalty program, one of the most popular programs for any retailer now, is expected to boost customer engagement and thereby, accelerate comps beyond fiscal 2017.
Starbucks’ latest digital offering, Mobile Order and Pay, is also witnessing increasing usage and could prove to be a key growth driver in the to-be-reported quarter as well as in 2017.
Now for the second quarter, though the company refrained from providing guidance, Starbucks anticipates global comp growth in full-year 2017 in the mid-single digit range. The first half of the year is likely to witness comps at the lower end of the range, with some improvement expected in the second half.
We expect global comps to be driven by significant menu innovations with the introduction of Sous Vide Egg Bites and the launch of its Macchiato products. The launch of ready-to-drink premium Teavana Craft Iced Teas is also likely to boost Channel Development division’s revenue.
Again, addition of new restaurants is expected to contribute to Starbucks’s revenue growth in the to-be-reported quarter.
With fiscal second quarter earnings around the corner, a major decision that Starbucks is dealing in recent times is the stepping down of Howard Schultz. Kevin Johnson, who served as a board member of the company for several years before joining its executive team two years ago, took over as CEO. Many analysts remain apprehensive about the decision and believe that this may hit the coffee chain in the near future. Despite the management shakeup, the company is forging ahead with its expansion plans, with focus on China.
While the company has been performing well, one dampening factor last quarter was the meager 3% growth in its comparable store sales or simply comps. The reported comps fell below the company's mid-single-digit guidance.
A challenging environment in the U.S. restaurant space, along with Starbucks’ recent sales performance, might be a cause of worry for investors in the near term. Again, stiff competition from companies like McDonald's Corporation (MCD - Free Report) may also exert pressure on Starbucks’ performance.
Meanwhile, for the second quarter, the Zacks Consensus Estimate for earnings is pegged at 52 cents a share, reflecting an increase of 13% year over year, while the consensus for revenues is at $5.82 billion, implying 8.4% year-over-year growth.
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 0.00% as the Most Accurate estimate of 45 cents per share is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Here are some companies in the Retail - Restaurants industry that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Restaurant Brands International Inc. (QSR - Free Report) , with an Earnings ESP of +5.71% and a Zacks Rank #1. It is slated to report its quarterly numbers on Apr 26.
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>
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Starbucks (SBUX) to Report Q2 Earnings: What's in Store?
Starbucks Corporation (SBUX - Free Report) is set to report second-quarter fiscal 2017 results on Apr 27, after the closing bell.
The coffee chain giant’s earnings were in line with the analysts’ expectations in the last reported quarter. In fact, Starbucks met expectation in three of the last four quarters and delivered a positive earnings surprise in the quarter ending Sep 2016, resulting in an average positive earnings surprise of 0.46%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Starbucks’s operating fundamentals remain strong with solid global retail footprint, successful innovations, best-in-class loyalty program and digital offerings. Particularly, Starbucks is strengthening its portfolio with significant innovation around beverages and core food offerings.
Again, a revamped customer loyalty program, one of the most popular programs for any retailer now, is expected to boost customer engagement and thereby, accelerate comps beyond fiscal 2017.
Starbucks’ latest digital offering, Mobile Order and Pay, is also witnessing increasing usage and could prove to be a key growth driver in the to-be-reported quarter as well as in 2017.
Now for the second quarter, though the company refrained from providing guidance, Starbucks anticipates global comp growth in full-year 2017 in the mid-single digit range. The first half of the year is likely to witness comps at the lower end of the range, with some improvement expected in the second half.
We expect global comps to be driven by significant menu innovations with the introduction of Sous Vide Egg Bites and the launch of its Macchiato products. The launch of ready-to-drink premium Teavana Craft Iced Teas is also likely to boost Channel Development division’s revenue.
Again, addition of new restaurants is expected to contribute to Starbucks’s revenue growth in the to-be-reported quarter.
With fiscal second quarter earnings around the corner, a major decision that Starbucks is dealing in recent times is the stepping down of Howard Schultz. Kevin Johnson, who served as a board member of the company for several years before joining its executive team two years ago, took over as CEO. Many analysts remain apprehensive about the decision and believe that this may hit the coffee chain in the near future. Despite the management shakeup, the company is forging ahead with its expansion plans, with focus on China.
While the company has been performing well, one dampening factor last quarter was the meager 3% growth in its comparable store sales or simply comps. The reported comps fell below the company's mid-single-digit guidance.
A challenging environment in the U.S. restaurant space, along with Starbucks’ recent sales performance, might be a cause of worry for investors in the near term. Again, stiff competition from companies like McDonald's Corporation (MCD - Free Report) may also exert pressure on Starbucks’ performance.
Meanwhile, for the second quarter, the Zacks Consensus Estimate for earnings is pegged at 52 cents a share, reflecting an increase of 13% year over year, while the consensus for revenues is at $5.82 billion, implying 8.4% year-over-year growth.
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 0.00% as the Most Accurate estimate of 45 cents per share is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Starbucks Corporation Price and EPS Surprise
Starbucks Corporation Price and EPS Surprise | Starbucks Corporation Quote
Stocks to Consider
Here are some companies in the Retail - Restaurants industry that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Restaurant Brands International Inc. (QSR - Free Report) , with an Earnings ESP of +5.71% and a Zacks Rank #1. It is slated to report its quarterly numbers on Apr 26.
Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) , with an Earnings ESP of +17.24% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. The company is expected to report its quarterly results on May 16.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>