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Americas & China Comps to Hurt Starbucks' (SBUX) Q3 Earnings
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Starbucks Corporation (SBUX - Free Report) is scheduled to report third-quarter fiscal 2020 results on Jul 28, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 3.23%.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter bottom line is pegged at a loss of 60 cents, against earnings of 78 cents reported in the prior-year quarter. Over the past 30 days, the company’s earnings estimates have been revised downwards by 21.7%. For quarterly revenues, the consensus mark is pegged at $4,126 million, suggesting growth of 39.5% from the year-ago reported figure.
China Comps Performance
The impact of the coronavirus pandemic is likely to get reflected in Starbucks’ fiscal third-quarter results. The company has been witnessing sales recovery in China from late February. In May, China comps declined 21%, compared with decrease of 32%, 64% and 78% in April, March and February, respectively. Comps in the last week of May fell 14%. The company is anticipated to post China comps decline in the range of 20% to 25%, compared with a slump of 50% in the prior quarter.
Americas Segment Comps Fall
In May, U.S. comps declined 43%, compared with decrease of 63% in April. In the final week of May, comps slumped nearly 32%. The company expects comparable store sales for the Americas and the U.S. to decrease 40% to 45% in the fiscal third quarter, and then improve to a decline of 10% to 20% in the fiscal fourth quarter. The Zacks Consensus Estimate for net revenues at Americas is pegged at $2,802 million, down 32.9% year over year.
Margin Decline
Margin decline has been a major concern for the company and the downtrend is likely to have persisted in the fiscal third-quarter. This was owing to sales deleverage and rise in costs due to the coronavirus pandemic, mostly catastrophe wages; heightened pay programs and additional benefits in support of retail store partners; inventory write-offs; and store safety items.
Our proven model does not conclusively predict 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 odds of an earnings beat. But that's not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Starbucks has an Earnings ESP of +3.04%.
Zacks Rank: The company has a Zacks Rank #4 (Sell).
Stocks With Favorable Combination
Here are some stocks from the Restaurant space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:
The Cheesecake Factory Incorporated (CAKE - Free Report) currently has a Zacks Rank #3 and an Earnings ESP of +30.07%.
Brinker International, Inc. (EAT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +19.81%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Image: Bigstock
Americas & China Comps to Hurt Starbucks' (SBUX) Q3 Earnings
Starbucks Corporation (SBUX - Free Report) is scheduled to report third-quarter fiscal 2020 results on Jul 28, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 3.23%.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter bottom line is pegged at a loss of 60 cents, against earnings of 78 cents reported in the prior-year quarter. Over the past 30 days, the company’s earnings estimates have been revised downwards by 21.7%. For quarterly revenues, the consensus mark is pegged at $4,126 million, suggesting growth of 39.5% from the year-ago reported figure.
China Comps Performance
The impact of the coronavirus pandemic is likely to get reflected in Starbucks’ fiscal third-quarter results. The company has been witnessing sales recovery in China from late February. In May, China comps declined 21%, compared with decrease of 32%, 64% and 78% in April, March and February, respectively. Comps in the last week of May fell 14%. The company is anticipated to post China comps decline in the range of 20% to 25%, compared with a slump of 50% in the prior quarter.
Americas Segment Comps Fall
In May, U.S. comps declined 43%, compared with decrease of 63% in April. In the final week of May, comps slumped nearly 32%. The company expects comparable store sales for the Americas and the U.S. to decrease 40% to 45% in the fiscal third quarter, and then improve to a decline of 10% to 20% in the fiscal fourth quarter. The Zacks Consensus Estimate for net revenues at Americas is pegged at $2,802 million, down 32.9% year over year.
Margin Decline
Margin decline has been a major concern for the company and the downtrend is likely to have persisted in the fiscal third-quarter. This was owing to sales deleverage and rise in costs due to the coronavirus pandemic, mostly catastrophe wages; heightened pay programs and additional benefits in support of retail store partners; inventory write-offs; and store safety items.
Starbucks Corporation Price and EPS Surprise
Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote
What the Zacks Model Unveils
Our proven model does not conclusively predict 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 odds of an earnings beat. But that's not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Starbucks has an Earnings ESP of +3.04%.
Zacks Rank: The company has a Zacks Rank #4 (Sell).
Stocks With Favorable Combination
Here are some stocks from the Restaurant space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:
Papa John's International, Inc. (PZZA - Free Report) has a Zacks Rank #1 and an Earnings ESP of +7.56%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Cheesecake Factory Incorporated (CAKE - Free Report) currently has a Zacks Rank #3 and an Earnings ESP of +30.07%.
Brinker International, Inc. (EAT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +19.81%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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