Retail

What to Expect From Starbucks Earnings

Starbucks Corp. (NASDAQ: SBUX) is scheduled to report its fiscal fourth-quarter financial results after the markets close on Tuesday. The consensus estimates call for $0.43 in earnings per share (EPS) on $4.90 billion in revenue. In the same period of the previous year, the the coffee giant posted EPS of $0.37 and revenue of $4.18 billion.

This company dominates the retail coffee business in the United States, and international growth is helping to boost earnings. In fact, the brand has become so ubiquitous that consumers often just say “Let’s grab a Starbucks.” Despite a pricing point that is higher than others, the company continues to add new items at its stores that have been received well. This is another company that beat Wall Street earnings estimates for the previous quarter.

Cowen recently pointed to the strong growth in card loads, which was up 20%, and growth in the My Starbucks Rewards program, which was up 28%. The firm also cited the digital initiatives, which helped to drive same-store-sales growth in the Americas up a solid 8%. Guidance for the year was raised to reflect last quarter’s solid beat and the current fourth-quarter guidance was maintained.

Starbucks has a $90 billion market cap. Its 2014 global revenue was $16.5 billion, and it generated $3.1 billion in operating income and almost $2.1 billion in net income. Starbucks has a dividend that is not just safe, but one that can grow for the next decade.

Its dividend history dates back only to 2010, and that initial five-cent dividend has now risen to $0.16 and is due to be hiked again soon. The current $0.64 annualized dividend payment compares to operating earnings of $1.33 per share a year ago. It also compares to a 2015 expected $1.59 per share, as well as $1.88 per share for 2016.

Ahead of its earnings a few analysts weighed in on Starbucks:

  • Wedbush reiterated an Outperform rating with a $70 price target.
  • Barclays reiterated an Equal Weight rating with a $54 price target.
  • Sanford Bernstein reiterated a Buy rating with a $70 price target.

So far in 2015, Starbucks has vastly outperformed the market, with the stock up 56%, while over the past 52 weeks the stock is up 67%.

Shares of Starbucks were last seen Thursday trading down 1.6% at 62.50, with a consensus analyst price target of $64.13 and a 52-week trading range of $37.46 to $63.84.

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