Starbucks announced Q4 earnings after market close on October 30th. Its earnings were in line with expectations. The stock rose slightly in after-market trading, but quickly reverted back to where it was a week earlier. Comparable store sales offered better news, up 5% globally, compared to 3% this time last year. Be on the lookout to see if comparable store sales continue to rise in the face of the global economic slowdown.
(Below is Investopedia's original earnings preview, published 10/29/19)
What to Look For
Coffeehouse giant Starbucks Corp. (SBUX) reports earnings after the market close on October 30 for fiscal Q4 2019. In the past 12 months, Starbucks stock has significantly outperformed the S&P 500, rising about 43%, despite the shares' general trend downward since the company released fiscal Q3 figures on July 25. For Q4, analysts expect Starbucks to report gains in both revenue and GAAP earnings per share (EPS) compared to the same quarter a year ago. However, earnings and revenue are likely to be down compared with fiscal Q3.
In recent quarters, Starbucks has reported revenue that has been either roughly flat or slightly up. The company posted revenue of $6.82 billion in the latest Q3 period. Over the same time period, EPS was $0.61 in fiscal Q1 2019, $0.53 in Q2 and then more than doubled to $1.12 in Q3. That constituted a surprise of more than 59%. The leap upward in revenue and EPS last quarter helped fuel the stock briefly to an all-time high when Q3 earnings came out in July 2019.
|Starbucks Key Metrics|
|Estimate for fiscal Q4 2019||Q4 2018||Q4 2017|
|Earnings per share||$0.67||$0.56||$0.54|
|Revenue (in billions of dollars)||6.67||6.31||5.70|
|YoY Change in Comparable Store Sales||N/A||3%||2%|
Investors will be closely watching Starbucks's comparable store sales growth (or "comps") in Q4. This key metric is an indicator of how the company's existing store locations have performed over time. In recent earnings periods, Starbucks's comparable store sales have shown steady growth, reassuring investors who might be concerned that the global coffee chain has become too big to maintain significant growth. For fiscal Q4 2017, for instance, comparable store sales growth accelerated from 2% during that period to 3% a year later, in Q4 of 2018. Alongside the spike in revenue and EPS last quarter, comp store growth ballooned to 6%. Since releasing its Q3 2019 earnings figures, Starbucks has cut its guidance for the 2020 fiscal year, a move which executives described as "conservative" but which nonetheless prompted a decline in the stock price. For that reason, investors will be looking for any weakness in the growth rate of EPS, revenue and comps for the final quarter of its fiscal year.