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Starbucks (SBUX) to Post Q2 Earnings: What's in the Offing?

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Starbucks Corporation (SBUX - Free Report) is scheduled to report second-quarter fiscal 2022 results on May 3, after the closing bell. In the last reported quarter, the company delivered an earnings miss of 10%.

Q2 Estimates

The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 60 cents per share, indicating a decline of 3.2% year over year. In the past seven days, earnings estimates for the current quarter have remained stable. The consensus mark for revenues stands at $7.61 billion, suggesting growth of 14.1% from the year-ago quarter.

Factors to Note

The company’s fiscal second-quarter performance is likely to have benefited from robust comps growth and digitalization. Increase in transaction and average ticket growth might have favored comps growth in the quarter to be reported. The company has been gaining from increase in 90-day active Starbucks Rewards members. The company continues to gain from strong expansion efforts. Starbucks expects to open nearly 2,000 net new stores worldwide in fiscal 2022.

Robust North America segment sales are likely to have driven the company’s top line. The Zacks Consensus Estimate for revenues for North America and International segments is pegged at $5,307 million and $1,875 million, suggesting year-over-year improvement of 13.8% and 16.4%, respectively.

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. However, pandemic-induced restrictions might have weighed on the company’s performance in China in the quarter to be reported.

Resurgence in coronavirus cases in some parts of the world may have hurt the to-be-reported quarter’s performance. The pandemic is likely to have impacted the company’s traffic in the quarter. High costs inflation might have affected the company’s margin. The expiration of government subsidies in Asia and the transition of Starbucks Korea to the licensee are likely to hurt the company’s margin in fiscal 2022.

Starbucks Corporation Price and EPS Surprise Starbucks Corporation Price and EPS Surprise

Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote

What the Zacks Model Unveils

Our proven model doesn’t 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 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 -4.18%. 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 #4 (Sell).

Stocks Poised to Beat Estimates

Here are some stocks worth considering from the Zacks Retail-Wholesale space as our model shows that these have the right combination of elements to beat on earnings this season:

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Costco Wholesale have gained 55.1% in the past year. COST’s earnings beat the consensus mark in each of the trailing four quarters, the average surprise being 13.3%.

Shake Shack Inc. (SHAK - Free Report) has an Earnings ESP of +6.85% and a Zacks Rank #3.

Shares of Shake Shack have declined 12.4% so far this year. SHAK’s earnings surpassed the consensus mark in each of the trailing four quarters, the average surprise being 89.2%.

Sweetgreen, Inc. (SG - Free Report) has an Earnings ESP of +28.23% and a Zacks Rank #3.

Shares of Sweetgreen have declined 44.3% in the past year. SG’s earnings and revenues in 2022 is likely to witness growth of 54.7% and 72.8% year over year, respectively.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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