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Starbucks (SBUX) Outruns Peers in Past 6 Months: Here's Why
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Despite inflation, shares of Starbucks Corporation (SBUX - Free Report) have gained 30.3% in the past six months compared with 15.3% rise of the industry it belongs to. The company is benefiting from expansion efforts, global comps growth and menu innovation.
This Zacks Rank #3 (Hold) company has an impressive long-term earnings growth rate of 13.4%. In 2023, the company’s sales and earnings are anticipated to witness growth of 11.4% and 14.9%, year over year, respectively.
Factors Driving Growth
The company continues to focus on expansion efforts to drive growth. In the second, third and fourth quarter of fiscal 2022, Starbucks opened 313, 318 and 763 net new stores worldwide, respectively, taking the total store count to 35,711. During the year, the company expects store count in the United States and China to grow approximately 3% and 13%, respectively, on a year-over-year basis. Capital expenditures in fiscal 2023 are estimated to be approximately $2.5 billion.
Performance being continuously affected by COVID-19, the company is optimistic about its long-term growth prospect in China. During fourth-quarter fiscal 2022, Starbucks surpassed 6,000 stores in China.
Image Source: Zacks Investment Research
Starbucks is strengthening its product portfolio with significant innovation around beverages, refreshment, health and wellness, tea and core food offerings. It is leaning toward fast-growing categories like Cold Brew, Draft Nitro beverages and plant-based modifiers, including almond, coconut, and soy milk alternatives. Additionally, it is making an effort to offer more nutritional and healthy products to its customers.
The company’s North America comps have impressed investors for the seventh straight quarter. North America comps rose 11% in the fiscal fourth quarter, owing to an improvement of 10% in average ticket. Global comparable store sales increased 7% year over year. The upside was primarily driven by an 8% rise in average tickets.
For fiscal 2023, the company anticipates global comparable sales to reach the high end of 7-9% target range. Consolidated revenues for fiscal 2023 are anticipated to grow in the range of 10-12% on a year-over-year basis. For fiscal 2023, the company anticipates non-GAAP EPS growth to be at the low end of 15-20% range.
Key Picks
Some better-ranked stocks in the Zacks Retail – Restaurants industry are Wingstop Inc. (WING - Free Report) , Chuy's Holdings, Inc. (CHUY - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) .
Wingstop currently sports a Zacks Rank #1 (Strong Buy). WING has a long-term earnings growth rate of 11%. Shares of WING have increased 0.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Chuy’s Holdings currently carries a Zacks Rank #2 (Buy). CHUY has a trailing four-quarter earnings surprise of 18.6%, on average. Shares of CHUY have increased 8% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 8.6% and 11.7%, respectively, from the corresponding year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 1.1% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.1% and 31%, respectively, from the corresponding year-ago period’s levels.
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Starbucks (SBUX) Outruns Peers in Past 6 Months: Here's Why
Despite inflation, shares of Starbucks Corporation (SBUX - Free Report) have gained 30.3% in the past six months compared with 15.3% rise of the industry it belongs to. The company is benefiting from expansion efforts, global comps growth and menu innovation.
This Zacks Rank #3 (Hold) company has an impressive long-term earnings growth rate of 13.4%. In 2023, the company’s sales and earnings are anticipated to witness growth of 11.4% and 14.9%, year over year, respectively.
Factors Driving Growth
The company continues to focus on expansion efforts to drive growth. In the second, third and fourth quarter of fiscal 2022, Starbucks opened 313, 318 and 763 net new stores worldwide, respectively, taking the total store count to 35,711. During the year, the company expects store count in the United States and China to grow approximately 3% and 13%, respectively, on a year-over-year basis. Capital expenditures in fiscal 2023 are estimated to be approximately $2.5 billion.
Performance being continuously affected by COVID-19, the company is optimistic about its long-term growth prospect in China. During fourth-quarter fiscal 2022, Starbucks surpassed 6,000 stores in China.
Image Source: Zacks Investment Research
Starbucks is strengthening its product portfolio with significant innovation around beverages, refreshment, health and wellness, tea and core food offerings. It is leaning toward fast-growing categories like Cold Brew, Draft Nitro beverages and plant-based modifiers, including almond, coconut, and soy milk alternatives. Additionally, it is making an effort to offer more nutritional and healthy products to its customers.
The company’s North America comps have impressed investors for the seventh straight quarter. North America comps rose 11% in the fiscal fourth quarter, owing to an improvement of 10% in average ticket. Global comparable store sales increased 7% year over year. The upside was primarily driven by an 8% rise in average tickets.
For fiscal 2023, the company anticipates global comparable sales to reach the high end of 7-9% target range. Consolidated revenues for fiscal 2023 are anticipated to grow in the range of 10-12% on a year-over-year basis. For fiscal 2023, the company anticipates non-GAAP EPS growth to be at the low end of 15-20% range.
Key Picks
Some better-ranked stocks in the Zacks Retail – Restaurants industry are Wingstop Inc. (WING - Free Report) , Chuy's Holdings, Inc. (CHUY - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) .
Wingstop currently sports a Zacks Rank #1 (Strong Buy). WING has a long-term earnings growth rate of 11%. Shares of WING have increased 0.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Chuy’s Holdings currently carries a Zacks Rank #2 (Buy). CHUY has a trailing four-quarter earnings surprise of 18.6%, on average. Shares of CHUY have increased 8% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 8.6% and 11.7%, respectively, from the corresponding year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 1.1% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.1% and 31%, respectively, from the corresponding year-ago period’s levels.