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Starbucks Earnings Not Hot Enough For Investors
Posted On Oct 30 2015
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Starbucks otherwise reported an impressive fiscal fourth quarter – earning $652.5 million, or 43 cents, meeting analyst forecasts according to FactSet. Analysts estimated 47 United States cents on average for the quarter, which ends in December.
Shares of Starbucks closed Thursday down 1.6% at $62.50, with a consensus analyst price target of $64.13 and a 52-week trading range of $37.46 to $63.84. Through Thursday’s close, Starbucks had gained 52 per cent this year.
Starbucks has been aiming to attract more customers world-wide through its digital initiatives and new menu offerings.
While it continued not to give a country-by-country breakdown of its performance, it said sales in its Europe, Middle East and Africa division, which takes in its United Kingdom business, rose by 4%.
The company observed customers’ rapid and accelerating adoption of Mobile Order and Pay feature for each new segment it rolls out and recently announced plans to roll out this feature across Canada as well. “I think that’s hands down a great investment”. Revenue jumped almost 18 percent to $4.91 billion, just ahead of forecasts.
BEYOND COFFEE: Starbucks has been trying to diversify from its coffee roots in order to boost sales. Investors will be looking to hear more about food sales as well as its expansion of Teavana stores, Starbucks Reserve stores, which sell only its small-batch Reserve coffees, and small-format stores.
The moves helped same-store sales in the Americas region climb 8 per cent in the quarter ended Sept 27.
Declining coffee prices also have been helping Starbucks’ profit. Earnings per share (EPS) are expected to be higher at 43 cents compared to previous 39 cents. The company has not even posted one moderate result over the past 20 months, and with accelerated advancements in the operations, such as the introduction of Starbucks Roastery and Tasting rooms, it is more likely for the company to post another strong comparable store sales growth. Fiscal ’16 EPS outlook for $1.87-$1.89 matched analysts.
