Full 360-Degree Starbucks Earnings Preview (SBUX, GMCR, CBOU, PEET)

Starbucks Corporation (NASDAQ: SBUX) is set to report earnings after the close.  As this one hit all-time highs in recent trading days, it would seem as though the broader opinion is that no real negative surprises are headed to Wall Street from Howard Schultz and friends.

Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) is often considered a rival despite the K-Cup relationship now. The downstream companies to watch after Starbucks reports earnings are Peet’s Coffee & Tea, Inc. (NASDAQ: PEET) and Caribou Coffee Company, Inc. (NASDAQ: CBOU).  Peet’s is up more than 50% off of its year lows and Caribou has roughly doubled from its year lows.

The company slowed its domestic growth massively in its turnaround, it has committed again to price hikes, and now it is even targeting the after-work crowd by offering beer, wine, and premium food items on a test basis in a few spots in America later this year.  That effort is too soon to judge.  Even a logo change had no negative impact.

Thomson Reuters has estimates of $0.49 EPS versus $0.45 a year ago, and revenue estimates are expected to be up more than 11% at $3.29 billion.  Estimates for the current quarter due in about 90 days are $0.38 EPS versus $0.34 a year earlier and on sales growth of almost 12% to $3.12 billion.

The chart offers little read for guidance since the stock hit all-time highs lately.  The moving average to watch are as follows: 20-day at $47.04; 50-day at $44.86; and 200-day at $39.81. 

Options traders appear to be braced for a move of up to about $1.40 or so in either direction if you use the February expiration.

As far as analysts and the current price of $47.78, the consensus target from Thomson Reuters is $48.71 and the 52-week range is $30.75 to $48.39.  Our take is that valuations are reaching a point that analysts may downgrade the stock on valuation unless the company blows the doors off the handle.

Still, this one has gone above and beyond what we expected as a peak value.  Thomson Reuters has September year-end estimates of $1.83 EPS for 2012 and $2.23 EPS for 2013.  That generates non-GAAP ratios of 26-times expected earnings for this year ahead and 21.5-times expected 2013 earnings.

JON C. OGG