What to Expect When Starbucks Reports Earnings

Starbucks Corp. (NASDAQ: SBUX) is scheduled to release its fiscal third-quarter earnings report after the markets close on Thursday. The drivers for Starbucks lie outside of the United States, but efforts with tea and wine may rekindle new upside in America as well. Sales growth for 2016 is expected to be north of 10%, as well as almost 9% in 2017.

The consensus estimates are $0.49 in earnings per share (EPS) on $5.33 billion in revenue. In the same period of last year, Starbucks posted EPS of $0.42 and $4.88 billion in revenue.

In the previous quarter, global comparable store sales increased 6%, comprised of a 4% increase in ticket and 2% increase in traffic. At the same time, the company served nearly 16 million more customer occasions from its global comp store base, with over 12 million coming from the United States, when compared to the same period from last year.

The membership in the Starbucks Rewards loyalty program grew by 16% year over year in its fiscal second-quarter, and also by 8% sequentially. Mobile Order and Pay usage doubled from the second quarter last year, and Starbucks is now processing 8 million Mobile Order and Pay transactions per month.

Also in a recent memo, Starbucks said that it would give all partners and store managers in U.S. company-operated stores an increase in base pay by 5% or greater, effective October 3. The range of increase was said to be determined by geographic and market factors and is intended to ensure Starbucks remains a retail employer of choice in all the markets where it operates.

Ahead of the earnings report, a few analysts weighed in on Starbucks:

  • Goldman Sachs has a Buy rating with a $73 price target.
  • Cowen reiterated a Buy rating.
  • Nomura reiterated a Buy rating.
  • Jefferies reiterated a Buy rating.
  • Morgan Stanley reiterated an Overweight rating.
  • Baird reiterated an Outperform rating.
  • Wedbush reiterated an Outperform rating with a $70 price target.
  • Stifel reiterated a Hold rating.

So far in 2016, Starbucks has underperformed the broad markets, with the stock down about 3.5%. Over the past 52 weeks, the stock is more in line with the markets.

Shares of Starbucks were trading at $57.56 on Thursday, with a consensus analyst price target of $67.92 and a 52-week trading range of $42.05 to $64.00.