Services

What to Expect When Starbucks Reports Earnings After the Close

Starbucks Corp. (NASDAQ: SBUX) is set to report its most recent quarterly results after the closing bell on Tuesday. Analysts anticipate $0.34 in earnings per share (EPS) and $5.89 billion in revenue. The fiscal second quarter of last year reportedly had $0.60 in EPS and $6.31 billion in revenue.

It was recently announced that Starbucks would be partnering with Beyond Meat to bring plant-based meat alternatives to China. Last week, Starbucks said that it would be rolling out a plant-based lunch menu in China this week and that Beyond Meat products would be front and center. Starbucks has reopened most of its Chinese locations and now it is looking to try something new in the People’s Republic.

Starbucks revenue as risen from $21.3 billion in fiscal 2016 to $26.5 billion in fiscal 2019. Over that period, net income has grown from $2.8 billion to $3.6 billion. Its store count has gone up by thousands in that time. Much of that is due to expansion in China, where the spread of COVID-19 has begun to abate.

Investors have started to question which retailers and fast-food chains will disappear completely because of the virus outbreak. Starbucks certainly will not be among them. Its revenue will dip, perhaps very sharply. It may even post losses in some upcoming quarters. However, it had $2.8 billion in cash at the end of the last fiscal year. It almost certainly has access to large lines of credit as well.

Overall, Starbucks stock has performed more or less in line with the Dow Jones industrial average and S&P 500, with shares down over 11% year to date. However, over the past 52 weeks, the stock is flat.

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

  • Jefferies has a Buy rating with a $70 target.
  • Oppenheimer has an Outperform rating and an $85 price target.
  • Wolfe Research has an Outperform rating with an $86 price target.
  • Argus’s Buy rating comes with a $100 target price.
  • Stephens rates it as Equal Weight with an $80 target.
  • Merrill Lynch has a Neutral rating and a $73 price target.

Starbucks stock traded at $78.02 on Tuesday, in a 52-week range of $50.02 to $99.72. The consensus price target is $77.50.