Starbucks Corporation (Nasdaq: SBUX) stock has been on quite a run since its last earnings report in October. Expectations are high ahead of the coffee giant’s fiscal first quarter earnings report expected Jan, 25, but analysts say Starbucks will deliver solid numbers and even more upside for investors.
The company set the stage for a glowing earnings report when it announced Wednesday that it will use some of the savings from the new U.S. corporate tax cuts to give domestic employees pay raises, Starbucks stock and expanded benefits with a combined worth of more than $250 million.
Consensus Wall Street estimates are calling for Starbucks to report first quarter earnings per share of 57 cents on $6.14 billion in revenue. Those numbers would represent 9.6 percent and 7.2 percent growth, respectively.
Investors will also be watching to see if Starbucks is on track to hit its full-year guidance of 3 to 5 percent same-store sales growth and EPS of between $2.30 and $2.33.
Bank of America analyst Gregory Francfort expects Starbucks to report in-line first quarter EPS and says U.S. same-store sales growth of at least 3 percent would be a positive sign for investors.
“We model $2.56 of [full-year] EPS, which assumes the 2Q-4Q tax rate drops to 22 to 23 percent and the company reinvests nearly 20 percent of that benefit into wages and worker perks,” Francfort says. Bank of America anticipates 2 percent same-store sales growth in Europe, the Middle East and Africa and 3 percent growth in China-Asia Pacific.
Francfort also says investors should be watching My Starbucks Reward membership numbers as well. Bank of America estimates loyalty members on average spend 2.6 times as much at Starbucks as non-members.
CFRA analyst Tuna Amobi says Starbucks is on track to grow revenue by 9.8 percent in fiscal 2018.
“We expect the company to achieve the lower end of its longer-term target for 3 to 4 percent growth in global comparable sales, likely paced by the Americas and the Asia Pacific regions versus relatively modest gains in EMEA,” Amobi says. “With a further retail expansion, we see revenues again rising almost 10 percent in fiscal 2018.”
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