Starbucks (SBUX) Fiscal Q1 Earnings Preview

Starbucks (NASDAQ:SBUX) has seen its stock price jump roughly 7% since Christmas, along with giants like Amazon (NASDAQ:AMZN) and much of the rest of the market. Now, the question is can the coffee firm’s recent run of success continue with Starbucks set to report its quarterly financial results after the closing bell Thursday.

Overview

Last quarter, Starbucks’ global comparable store sales popped 3%. This growth was driven by a 4% jump in the average ticket. More specifically, U.S. comps popped 4%, while same-store sales rose 1% in China. Overall, the coffee giant’s fiscal Q4 revenues surged 10.6% and its loyalty program’s active U.S. membership climbed 15% to 15.3 million.

On top of the firm’s growing rewards program, which helps create brand loyalty, Starbucks’ mobile order and pay unit accounted for 14% of total U.S. company-operated transactions. Going forward, Starbucks’ ability to expand its mobile order business could prove key and help it take on rival Dunkin' (NASDAQ:DNKN) .

With that said, investors should note that Starbucks executives said in December that it plans to expand coffee delivery across the U.S. with UberEats. The firm has been testing delivery in Miami and plans to begin to offer delivery at nearly a quarter of its more than 8,000 U.S. company-operated stores early this year. At this point, everyone from Walmart (NYSE:WMT) and Target (NYSE:TGT) to McDonald's (NYSE:MCD) have jumped into delivery—though hot coffee does present somewhat unique challenges.

Starbucks’ delivery business has already grown quickly in the vital Chinese market, through a partnership with Alibaba (NYSE:BABA) . With that said, some analysts and investors are worried that Apple’s (NASDAQ:AAPL) Chinese slowdown could signal a similar downturn for everyone from Starbucks to Nike (NYSE:NKE) .

Fiscal Q1 Outlook

Moving on, Starbucks’ first-quarter revenues are projected to climb by 6.8% to reach $6.49 billion, based on our current Zacks Consensus Estimate. We should note that this would mark a significant slowdown compared to Q4’s nearly 11% top-line expansion. Maybe more importantly, however, our NFM estimate calls for SBUX’s quarterly comparable store sales to pop 3%. This would match Q4’s expansion and top the year-ago period’s 2% climb.

Meanwhile, at the other end of the income statement, SBUX’s adjusted quarterly earnings are expected to come in flat from the prior-year quarter at $0.65 per share. We should also note that the company has seen some positive earnings estimate revision activity recently for Q1.

Bottom Line

Starbucks is a Zacks Rank #3 (Hold) at the moment based, in part, on its recent earnings revision trends. The company also sports an overall “A” VGM score, driven by its “A” grade for Growth in our Style Scores system. It is also worth noting that SBUX stock moved mostly sideways over the last three years until its summer-2018 surge.

Starbucks is scheduled to release its fiscal Q1 2019 financial results after the market closes this Thursday, January 24. Make sure to come back to Zacks after the coffee powerhouse reports for a complete breakdown.

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