Seattle-based Starbucks Corporation (SBUX), market cap of around $110.2 billion, legacy of elevating the coffeehouse experience. With over 38,000 stores worldwide, it has turned coffee into a lifestyle, offering not just premium blends but also Teavana teas, La Boulange bakery treats, and Evolution Fresh juices.
Starbucks turned a simple cup of coffee into a premium experience, blending quality with inviting atmospheres. Starbucks is gearing up to unveil its Q4 earnings after the market close on Wednesday, Oct. 30.
Ahead of the event, analysts expect Starbucks to report a profit of $0.84 per share, down 20.8% from $1.06 per share in the year-ago quarter. The company beat or matched the consensus estimates in two of the last four quarters while missing on two other occasions. Its fiscal Q3 adjusted EPS of $0.93, down 7% year over year, matched the projections.
For fiscal 2024, analysts expect Starbucks to report EPS of $3.34, down 5.7% from $3.54 in fiscal 2023. However, looking ahead, the company’s bottom-line is projected to surge 4.5% year over year to $3.49 per share in fiscal 2025.
SBUX has underperformed the S&P 500 Index’s ($SPX) 38.7% gains over the past 52 weeks, with shares up 3.5% during this period. Similarly, it lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 11.9% gains over the same time frame.
The coffee giant has faced a mixed bag in 2024. On the downside, the Starbucks has underperformed the broader market, with the stock sliding after underwhelming second and third-quarter earnings. Global sales and margins have shrunk, especially in China, where same-store sales dropped 14% due to heightened competition and a softening consumer market. Growth concerns have left investors cautious despite steady dividend hikes.
On the positive side, Starbucks boasts a strong track record of 13 consecutive years of dividend growth and is actively expanding, adding 526 net new stores in Q3, bringing its global total to 39,477 locations.
With new CEO Brian Niccol at the helm, the company aims to return to its core values – quality, customer experience, and a renewed focus on the U.S. market. Although the brand’s reliability remains intact, uncertainty about its long-term growth continues to cloud sentiment and hence, its stock price.
Starbucks has a consensus “Moderate Buy” rating overall. Of the 27 analysts covering the stock, 16 advise a “Strong Buy,” one gives a “Moderate Buy,” eight suggest a “Hold,” one recommends a “Moderate Sell,” and the remaining one has a “Strong Sell.”
The mean price target of $101.48 suggests a potential upside of 4.3% from current price levels.
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