Starbucks Was Looking Too Hot Ahead of Earnings

Starbucks Corp. (NASDAQ: SBUX | SBUX Price Prediction) had seen growth for years and years, taking over the coffee scene by force. The retailer has now released its earnings for its fiscal fourth quarter of 2020 at $0.51 per share and $6.02 billion in revenues. These are compared to $0.70 EPS and $6.75 billion in revenues a year earlier.

The consensus estimates from Refinitiv were calling for $0.31 in earnings per share (EPS) on $6.06 billion in revenue.

Starbucks noted that its global comparable store sales declined by 9%. The company cited a 23% decrease in comparable transactions, but it was partly offset by a 17% increase in its average ticket. Americas and U.S. comparable store sales declined 9%, while international comparable store sales were down 10%.

The company also reported that it opened 480 net new stores in the fourth quarter. That was up 4% for total unit growth versus this time in 2019. Starbucks ending the quarter with 32,660 stores globally.

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Starbucks is continuing to see a recovery in China. The company noted that China’s comparable store sales were down by only 3% compared to a year earlier, with comparable transactions down 7% being partially offset by a 5% increase in the average ticket. It was also noted that international and China comparable store sales included a benefit from value-added tax exemptions of approximately 2% and 4%, respectively

One interesting view is that Starbucks is now offering guidance for the coming year, a rarity in corporate earnings with a pandemic to factor in. Consolidated revenues are being forecast to be in a range of $28.0 billion to $29.0 billion, including a $500 million impact attributable to the 53rd week. The 2021 adjusted earnings forecast was put in a range of$2.70 to $2.90 EPS, including a $0.10 impact attributable to a 53rd week. Refinitiv has its consensus estimates at $2.74 EPS and revenues of about $28 billion.

After closing up 1.3% at $88.30 ahead of earnings, this stock’s 52-week range was $50.02 to $94.13 and its Refinitiv consensus analyst target price was $89.19.

Starbucks was last seen trading down almost 1% at $87.45 in Thursday’s after-hours trading reaction. This was a more muted reaction to the prior earnings report.

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