The Street’s Starbucks Earnings Prediction

Starbucks is set to report earnings on Tuesday, and while the virus remains a very real threat, investors are already looking ahead to the coffee giant’s post-pandy future.

Starbucks [$SBUX] posted a better-than-expected Q4 back in October, and forecasted a quicker recovery from the virus-laden economy. That was a refreshing change from the summer, when the pandy caused it to post a loss and caused management to caution that a rebound might take longer than bulls imagined.

Wall Street analysts have asserted that the virus is only a temporary roadblock.The company has stayed resilient and boosted its customer-retention efforts while pivoting to a new strategy, optimists argue.

Despite that, with the virus still claiming thousands of Americans lives a day, even bulls forewarn that this week’s earnings report may not show much progress toward a bounce back.

“Starbucks’ sales trends improved substantially relative to the second calendar quarter, led by markets that were further along the post-COVID-19 reopening path, particularly mainland China. Starbucks has quickly adapted and made investments that should move it into a better competitive position as society returns to normal. For example, it has ramped up opening more stores with drive-through and pick-up capabilities, in addition to continued digital and loyalty program expansions.” — Wedgewood Partners

Make no mistake, fewer people are visiting Starbucks, though mentioned that things started to look up toward the end of 2020. Visits during the week of December 28 were down 17.5% YOY, the company’s best showing since mid-October.

Starbucks has gained nearly 17% in the past year, but the stock is off 3% in 2021. Analysts are seeking an EPS of 55 cents and revenue of $6.91 billion. Which is compared with 51 cents in the previous quarter and 79 cents in the year-earlier period.

Ultimately, The Street is pretty evenly split on the stock, with 47% of analysts having a Buy rating or the equivalent, while the remaining 53% rate it at Hold. The average price target is $109.47.


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