Starbucks Corp. (NASDAQ: SBUX) is scheduled to report its fiscal fourth-quarter financial results after the markets close on Thursday. This coffee giant has had a rough run of 2016, with shares just trading above its 52-week lows. Some of this slide can be contributed to growth concerns globally and in China. Investors are looking for some good news, and this report has the potential to perhaps salvage this year — or push it to even lower lows.
The consensus estimates from Thomson Reuters are $0.55 in earnings per share (EPS) and $5.68 billion in revenue. The same period of last year reportedly had EPS of $0.43 and $4.91 billion in revenue.
One of the latest pieces of news out of Starbucks is that it will aggressively increase its footprint in China. This has been part of the fast-food industry’s game plan for years. In addition, Starbucks management says it will build 1,000 of its Reserve Cafes, upscale versions of its current locations, by the end of 2017. Twelve exist today, located in New York, Chicago, Atlanta, Baltimore and Boston.
An argument can be made that Starbucks’ 24,000 retail stores around the world may head the company toward a market saturation level. The new 1,000 stores and efforts in China would say management thinks otherwise.
The risks as Starbucks expands are considerable, and its shares trade to reflect growth concerns within China and globally.
A few analysts weighed in on Starbucks ahead of the earnings report:
- Credit Suisse reiterated a Neutral rating with a $58 price target.
- Deutsche Bank has a Hold rating with a $59 price target.
- RBC Capital Markets has an Outperform rating with a $64 price target.
- Credit Agricole has a Buy rating with a $68 price target.
- Wedbush has an Outperform rating with a $65 price target.
- Goldman Sachs reiterated a Buy rating with a $69 price target.
- Piper Jaffray has a Buy rating with a $72 price target.
- Longbow Research has a Buy rating.
- BTIG has a Buy rating with a $64 price target.
So far in 2016, Starbucks has underperformed the broad markets, with the stock down about 12%. Over the past 52 weeks, the stock is only down more than 15%.
Shares of Starbucks traded down nearly 1% at $52.49 Thursday morning, with a consensus analyst price target of $65.73 and a 52-week trading range of $52.09 to $63.19.
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