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Starbucks' (SBUX) Q4 Earnings Likely to be Hurt by High Costs
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Starbucks Corporation (SBUX - Free Report) is scheduled to report its fourth-quarter fiscal 2022 results on Nov 3, after the closing bell. In the last reported quarter, the company delivered an earnings beat of 9.1%.
Q4 Estimates
The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 73 cents per share, indicating a decline of 27% year over year. In the past 30 days, earnings estimates for the current quarter have remained stable. The consensus mark for revenues stands at $8.43 billion, suggesting growth of 3.4% from the year-ago quarter.
Factors to Note
The company’s fiscal fourth-quarter top line is likely to have benefited from comps growth, expansion efforts and solid North America sales. We expect North America sales to be $6,183.4 million, up 7.3% year over year. It has been benefiting from growth in company-operated comparable store sales, new store growth and higher contribution from licensed store sales.
An increase in transaction and average ticket growth is likely to have favored comps growth in the quarter to be reported. The company has been gaining from an increase in 90-day active Starbucks Rewards members.
However, a decline in international sales is likely to have negatively impacted the company’s performance. We expect international sales to be $1,804 million, down 5.8% year over year. The dismal performance in China is likely to have negatively impacted the company’s international sales. At the end of third-quarter fiscal 2022, the company noted that nearly one-third of its stores in China remain temporarily closed or are offering mobile ordering channels only.
Inflationary pressures and increased investments in store partner wages and benefits are likely to have hurt the margin in the quarter-to-be reported. We expect the adjusted operating margin in fourth-quarter fiscal 2022 to be 14.6% compared with the 19.6% reported in the prior-year quarter.
Our proven model predicts an earnings beat for Starbucks this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Starbucks has an Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, of +0.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Poised to Beat Estimates
Here are some other stocks worth considering from the Zacks Retail-Wholesale space as our model shows that these too have the right combination of elements to beat on earnings this season:
Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +9.20% and a Zacks Rank #2.
Shares of Foot Locker have declined 32.5% in the past year. FL’s earnings beat the consensus mark in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 28.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Noodles & Company (NDLS - Free Report) currently has an Earnings ESP of +31.25% and a Zacks Rank #2.
Shares of Noodles & Company have declined 52.5% in the past year. NDLS’ earnings beat the consensus mark twice in the trailing four quarters and missed twice. The company has a trailing four-quarter negative earnings surprise of 33.6% on average.
Texas Roadhouse, Inc. (TXRH - Free Report) currently has an Earnings ESP of +3.64% and a Zacks Rank #2.
Shares of Texas Roadhouse have improved 8.7% in the past year. TXRH’s earnings surpassed the consensus mark thrice in the trailing four quarters and missed once, the average surprise being 7.7%.
Image: Bigstock
Starbucks' (SBUX) Q4 Earnings Likely to be Hurt by High Costs
Starbucks Corporation (SBUX - Free Report) is scheduled to report its fourth-quarter fiscal 2022 results on Nov 3, after the closing bell. In the last reported quarter, the company delivered an earnings beat of 9.1%.
Q4 Estimates
The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 73 cents per share, indicating a decline of 27% year over year. In the past 30 days, earnings estimates for the current quarter have remained stable. The consensus mark for revenues stands at $8.43 billion, suggesting growth of 3.4% from the year-ago quarter.
Factors to Note
The company’s fiscal fourth-quarter top line is likely to have benefited from comps growth, expansion efforts and solid North America sales. We expect North America sales to be $6,183.4 million, up 7.3% year over year. It has been benefiting from growth in company-operated comparable store sales, new store growth and higher contribution from licensed store sales.
An increase in transaction and average ticket growth is likely to have favored comps growth in the quarter to be reported. The company has been gaining from an increase in 90-day active Starbucks Rewards members.
However, a decline in international sales is likely to have negatively impacted the company’s performance. We expect international sales to be $1,804 million, down 5.8% year over year. The dismal performance in China is likely to have negatively impacted the company’s international sales. At the end of third-quarter fiscal 2022, the company noted that nearly one-third of its stores in China remain temporarily closed or are offering mobile ordering channels only.
Inflationary pressures and increased investments in store partner wages and benefits are likely to have hurt the margin in the quarter-to-be reported. We expect the adjusted operating margin in fourth-quarter fiscal 2022 to be 14.6% compared with the 19.6% reported in the prior-year quarter.
Starbucks Corporation Price and EPS Surprise
Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Starbucks this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Starbucks has an Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, of +0.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Poised to Beat Estimates
Here are some other stocks worth considering from the Zacks Retail-Wholesale space as our model shows that these too have the right combination of elements to beat on earnings this season:
Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +9.20% and a Zacks Rank #2.
Shares of Foot Locker have declined 32.5% in the past year. FL’s earnings beat the consensus mark in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 28.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Noodles & Company (NDLS - Free Report) currently has an Earnings ESP of +31.25% and a Zacks Rank #2.
Shares of Noodles & Company have declined 52.5% in the past year. NDLS’ earnings beat the consensus mark twice in the trailing four quarters and missed twice. The company has a trailing four-quarter negative earnings surprise of 33.6% on average.
Texas Roadhouse, Inc. (TXRH - Free Report) currently has an Earnings ESP of +3.64% and a Zacks Rank #2.
Shares of Texas Roadhouse have improved 8.7% in the past year. TXRH’s earnings surpassed the consensus mark thrice in the trailing four quarters and missed once, the average surprise being 7.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.