Coffeehouse chain Starbucks (NASDAQ: SBUX) will be announcing earnings results this Wednesday after market close. Here’s what to look for.
Starbucks beat analysts’ revenue expectations last quarter, reporting revenues of $9.53 billion, up 8.8% year on year. It was an exceptional quarter for the company, with an impressive beat of analysts’ same-store sales estimates and a beat of analysts’ EPS estimates.
Is Starbucks a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.
This quarter, the market is expecting Starbucks’s revenue to decline 3% year on year, a reversal from the 3.8% increase it recorded in the same quarter last year.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Starbucks has missed Wall Street’s revenue estimates multiple times over the last two years.
Looking at Starbucks’s peers in the restaurants segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Domino's delivered year-on-year revenue growth of 4.3%, beating analysts’ expectations by 1.2%, and Darden reported revenues up 13.7%, in line with consensus estimates. Domino's traded up 1.3% following the results.
Read our full analysis of Domino’s results here and Darden’s results here.
In the last twelve months or so, the market has shifted its attention from one area of macro importance to the next (AI disintermediation and AI capex spending to geopolitical conflict, rates, and whether the economy is on solid footing or not). While some of the restaurants stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 2.7% on average over the last month. Starbucks’s stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $106.45 (compared to the current share price of $104).
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