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Starbucks (SBUX) Gears Up for Q1 Earnings: What's in Store?

Zacks Equity Research
·4-min read

Starbucks Corporation SBUX is scheduled to report first-quarter fiscal 2022 results on Feb 1, after the closing bell. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate.

Q1 Estimates

The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 80 cents per share, indicating growth of 31.2% year over year. In the past seven days, earnings estimates for the current quarter have been revised upward by a penny. The consensus mark for revenues stands at $7.99 billion, suggesting growth of 18.4% from the year-ago quarter.

Factors to Note

The company’s fiscal first-quarter performance is likely to have benefited from robust comps growth and digitalization. The company’s robust store expansion efforts are likely to have contributed to the top line. Starbucks expects to open nearly 2,000 net new stores worldwide in fiscal 2022.

Increase in transaction and average ticket growth might have driven the company’s comps. In the fourth quarter of fiscal 2021, the company’s North America segment reported comps growth of 22% year over year, owing to an 18% increase in transaction comps and a 3% rise in average ticket. U.S. comps rose 20% in the fiscal fourth quarter, courtesy of a material increase in transaction comps of 19%. The company now anticipates global comparable sales to reach high-single digits in fiscal 2022.

China and the Asia-Pacific regions have been gaining from unit growth, rising brand awareness and increased usage of the digital/mobile/loyalty platforms. In the past year, mobile order sales have doubled in China. The company has been gaining from its partnership with Beyond Meat to roll out a plant-based lunch menu in China.

The Zacks Consensus Estimate for revenues for North America and International segments is pegged at $5,634 million and $1,891 million, suggesting year-over-year improvement of 19.8% and 14.3%, respectively.

However, resurgence in coronavirus cases in some parts of the world might have weighed on the to-be-reported quarter’s performance. The pandemic is likely to have impacted the company’s traffic in the quarter. During the fourth quarter of fiscal 2021, operations in Starbucks China were affected by pandemic-induced restrictions across 18 provincial level regions. With a majority of the stores closed (or operating at different levels of elevated public health protocols), the company reported constrained customer mobility with operations pertaining to mobile ordering and limited seating.

Starbucks Corporation Price and EPS Surprise

Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Starbucks this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Starbucks has an Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, of +2.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some other stocks from the Zacks Retail-Wholesale sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the quarter to be reported:

Costco Wholesale Corporation COST has an Earnings ESP of +1.30% and a Zacks Rank #2.

Shares of Costco Wholesale have gained 33.1% in the past year. COST’s earnings beat the consensus mark thrice in the trailing four quarters and missed once, the average surprise being 8.3%.

Yum! Brands, Inc. YUM has an Earnings ESP of +0.62% and a Zacks Rank #3.

Shares of Yum! Brands have gained 18% in the past year. YUM’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 19.8%.

The ONE Group Hospitality, Inc. STKS has an Earnings ESP of +14.29% and a Zacks Rank #3.

Shares of The ONE Group have gained 202.8% in the past year. STKS’ earnings topped the consensus mark thrice in the trailing four quarters and missed once, the average surprise being 30.9%.

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Starbucks Corporation (SBUX) : Free Stock Analysis Report

Yum Brands, Inc. (YUM) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

The ONE Group Hospitality, Inc. (STKS) : Free Stock Analysis Report

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Zacks Investment Research