Starbucks Corporation (NASDAQ:SBUX) shares fell 8.4% to US$85.84 in the week since its latest first-quarter results. It was a credible result overall, with revenues of US$7.1b and statutory earnings per share of US$0.74 both in line with analyst estimates, showing that Starbucks is executing in line with expectations. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Starbucks from 27 analysts is for revenues of US$28.1b in 2020, which is an okay 4.3% increase on its sales over the past 12 months. Statutory earnings per share are forecast to shrink 5.1% to US$2.93 in the same period. Before this earnings report, analysts had been forecasting revenues of US$28.4b and earnings per share (EPS) of US$2.96 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$96.07, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Starbucks at US$110 per share, while the most bearish prices it at US$84.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to Starbucks's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Starbucks's revenue growth will slow down substantially, with revenues next year expected to grow 4.3%, compared to a historical growth rate of 8.5% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 7.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Starbucks to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$96.07, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Starbucks going out to 2023, and you can see them free on our platform here..
You can also see whether Starbucks is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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