Can Starbucks Get Back on Track With Q4 Earnings?

Starbucks Corp. (NASDAQ: SBUX) is set to report its fiscal fourth-quarter financial results after the closing bell on Wednesday. The consensus estimates are $0.70 in earnings per share (EPS) and $6.68 billion in revenue. In the same period of last year, the coffee purveyor said it had $0.62 in EPS and $6.3 billion in revenue.

Previously, the coffee giant cut its EPS growth outlook for 2020, saying that it expects EPS to be “meaningfully below” the model of at least 10% growth.

The impact is due in part to a tax benefit in 2019 that will end in its next fiscal year, which starts in October, and the company also will reduce share buybacks.

In recent years, Starbucks has made some changes to revitalize growth, including closing locations in U.S. markets that were densely populated with cafes and instead focusing more on suburban markets and expansion in China.

The company backed its fiscal 2019 EPS guidance of $2.80 to $2.82, which is roughly in line with the analyst consensus estimate of $2.82.

In July, the company posted its best quarterly sales growth in three years, boosted by gains in customer traffic and higher prices. It also increased its profit forecast, buoying investors a year after uninspiring results had them questioning the company.

Excluding Wednesday’s move, Starbucks had outperformed the broad markets, with the stock up about 30% year to date. In the past 52 weeks, the stock was up closer to 45%.

A few analysts weighed in on Starbucks ahead of the report:

  • Wedbush has a Hold rating with an $86 price target.
  • Bank of America rates it a Buy with a $100 price target.
  • Cowen has a Hold rating and a $93 price target.
  • Cleveland has a Hold rating.
  • BTIG Research has a Hold rating.
  • Robert Baird has a Hold rating too.

Shares of Starbucks traded down about 1% to $83.35 on Wednesday, in a 52-week range of $58.07 to $99.72. The consensus price target is $95.74.