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Starbucks Tops 4Q Estimates, Sees Strong Global Comps In FY21

support@smarteranalyst.com (Ben Mahaney)
·2 min read

Starbucks reported 4Q earnings of $0.51 per share that declined 27.1% year-over-year but came in well ahead of the analysts’ expectations of $0.31 per share. The coffee chain’s 4Q revenues of $6.2 billion decreased 8% year-over-year amid the pandemic but exceeded the Street estimate of $6.06 billion.

Starbucks’ (SBUX) global comparable-store sales (comps) declined 9% year-over-year, compared with analysts’ estimates of a 12.1% decline. Comparable transactions declined 15% in 4Q, which was partially offset by a 17% increase in average ticket. The company also opened 480 stores in 4Q.

Notably, the comps declined 9% in the U.S., while international comps fell 10%, especially in China, where comps declined 3% in 4Q from the year-ago quarter. The company’s CEO Kevin Johnson said that the results were “underpinned by a faster-than-expected recovery in our two lead growth markets, the U.S. and China.”

For fiscal 2021, the company anticipates adjusted profit in the range of $2.70 - $2.90 per share, compared with analysts’ forecast $2.74 per share. It also expects fiscal 2021 revenues in the range of $28 - $29 billion, compared with the consensus estimate of $28 billion. Starbucks foresees global comps to rise in the range of 18% - 23%. (See SBUX stock analysis on TipRanks).

Ahead of its results, on Oct. 26, RBC Capital analyst Christopher Carril raised the price target to $97 (9.9% upside potential) from $89 and maintained a Buy rating on Starbucks stock. The analyst said that Starbucks remains an "attractive recovery play" within restaurants as it has the ability to transform its physical store base to drive-thrus and pickups. It can also leverage its "already best-in-class" digital platform and loyalty program.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys and 8 Holds. The average price target of $92.85 implies upside potential of about 5.2% to current levels. Shares are up by 0.43% year-to-date.

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