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Why Starbucks’ Upcoming 4Q15 Earnings Evoke Mixed Emotions

Adam Jones

Starbucks' 4Q15 Earnings: What Can Investors Expect?

Starbucks’ 4Q15 earnings

Starbucks (SBUX) is set to report its 4Q15 earnings on October 29, 2015, after the market closes. Since its previous earnings, Starbucks shares rose 10.4%. YTD (year-to-date), the company has returned 53.1%. The iShares Global Consumer Discretionary (RXI) has returned 7.3% YTD. The S&P 500 Index has returned -0.3% YTD.

EPS estimates and growth

  • Analysts are estimating that Starbucks will report an EPS (earnings per share) of $0.43 for 4Q15 compared to $0.37 in 4Q14.
  • This would mean an EPS growth rate of 16%.
  • Starbucks’ EPS has grown at an average rate of 21% over the past 11 quarters. So, the analysts are expecting the growth rate to fall this quarter.
  • Starbucks delivered a positive earnings surprise in seven of the 11 quarters. You can see this in the above chart.
  • On an average, Starbucks’ share price rose by 2.1% the next trading day after the earnings release.
  • So, the question is whether Starbucks will deliver a positive surprise again or miss the expectations.

Series overview

In this series, we’ll discuss some of the key financial metrics that drive Starbucks’ stocks. We’ll also discuss what drives these financial metrics. For example, we’ll discuss the same-store sales growth as well as the unit growth that drives the revenue. We’ll explain why Starbucks’ investors should closely track these two drivers. We’ll also discuss what to expect in the upcoming 4Q15 earnings. We’ll look at the margin trends. We’ll wrap up this series with the valuation multiples for Starbucks and its peers. This will help you understand your investments in other restaurant stocks like Yum! Brands (YUM), Chipotle (CMG), and Shake Shack (SHAK).

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