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Seattle, Washington-based Starbucks Corporation (SBUX) roasts, markets, and retails coffee. Valued at $89.79 billion by market cap, the company offers packaged and single-serve coffees and teas, beverage-related ingredients, and ready-to-drink beverages, and produces and sells bottled coffee drinks and a line of ice creams. The world’s largest coffeehouse chain is expected to announce its fiscal third-quarter earnings for 2024 after the market closes on Tuesday, Jul. 30.
Ahead of the event, analysts expect SBUX to report a profit of $0.93 per share on a diluted basis, down 7% from $1 per share in the year-ago quarter. The company beat the consensus estimates in two of the last four quarters while missing on two other occasions.
For the full year, analysts expect SBUX to report EPS of $3.57, up marginally from $3.54 in fiscal 2023.
SBUX stock has underperformed the S&P 500’s ($SPX) 22% gains over the past 52 weeks, with shares down 25.7% during this period. Similarly, it underperformed the Consumer Disc ETF Vanguard’s (VCR) 11.9% gains over the same time frame.
On Jul. 19, SBUX climbed more than 6% after the Wall Street Journal reported that activist investor Elliott Management had built a “sizeable” stake in the company. The activist hedge fund has been discussing ways to improve the company’s lagging stock performance.
SBUX’s overall performance can be attributed to the drop in demand in two of its key markets, the United States and China, and its poor Q2 results, with same-store sales falling for the first time in nearly three years. On Apr. 30, SBUX reported its Q2 results, with its EPS coming in at $0.68, falling short of Wall Street expectations of $0.79. The company’s revenue was $8.56 billion, missing Wall Street forecasts of $9.14 billion.
SBUX lowered expectations for its full-year sales and EPS after reporting its Q2 results. Full-year global revenue growth is expected in the low-single-digit range, down from the previous range of 7% and 10%, while earnings growth is expected to be flat to the low-single-digit, down from the 15% to 20% range guided previously. The company’s full-year same-store sales are expected to be flat or fall by single-digit percentages, down from the previous guidance of a growth of 4% to 6%. Following its disappointing second-quarter earnings report, SBUX stock plunged nearly 16%.
Analysts’ consensus opinion on SBUX stock is bullish, with a “Moderate Buy” rating overall. Out of 26 analysts covering the stock, 10 advise a “Strong Buy” rating, one suggests a “Moderate Buy” rating, and 15 give a “Hold.” The average analyst price target for SBUX is $90.96, indicating a potential upside of 14.7% from the current levels.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
