Coffeehouse chain Starbucks (NASDAQ: SBUX) will be reporting earnings tomorrow after market close. Here’s what to expect.
Starbucks missed analysts’ revenue expectations by 1.5% last quarter, reporting revenues of $9.11 billion, flat year on year. It was a slower quarter for the company: Same-store sales missed slightly, leading to a revenue miss. In addition, earnings fell below Wall Street's expectations.
Is Starbucks a buy or sell going into earnings? Read our full analysis here, it’s free.
This quarter, analysts are expecting Starbucks’s revenue to decline 2.5% year on year to $9.14 billion, a reversal from the 11.4% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.89 per share.
Heading into earnings, analysts covering the company have grown increasingly bearish with revenue estimates seeing 11 downward revisions over the last 30 days (we track 16 analysts). Starbucks has missed Wall Street’s revenue estimates five times over the last two years.
Looking at Starbucks’s peers in the restaurants segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Domino's delivered year-on-year revenue growth of 5.1%, missing analysts’ expectations by 1.6%, and Texas Roadhouse reported revenues up 13.5%, in line with consensus estimates. Domino's traded up 4% following the results while Texas Roadhouse was also up 3.6%.
Read our full analysis of Domino’s results here and Texas Roadhouse’s results here.
There has been positive sentiment among investors in the restaurants segment, with share prices up 5.5% on average over the last month. Starbucks’s stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $100.94 (compared to the current share price of $98.09).
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