For the long-term, Starbucks Corp. still remains many analysts favorite although there are some near-term concerns. In April, for the first time since 2005, Starbucks carried out a 2-for-1 stock split.
After the closing bell on Thursday, Starbucks Corp. (SBUX, +0.83%) is expected to report second quarter earnings. FactSet consensus indicates that Starbucks is expected to post a 33 cents earnings per share (EPS) after the company carried out a 2-for-1 stock split on the 9th April 2015. Starbucks management have set an earnings range of 32-33cents. Adjusted for the 2-for-1 split, the company reported a 40 cents EPS for the 1st quarter.
The company expects to report $4.53 billion in revenue according to consensus from FactSet which will indicate an increase from $3.8 billion a year ago; however, less than the $4.80 billion reported last quarter.
Interestingly, the coffee chain has missed 7 out of ten consensus revenue estimates. Analysts anticipate a 5.1 percent increase in same store sales. Over the last 2 quarters, there has been a flat 5% gain in same-store sales.
Compared to the current stock price of $47.90, FactSet analysts have indicated a $51.22 stock price target. Over the past three months, the stock has increased 18 percent with a 17 percent gain this calendar year so far which is above the 2 percent gained by the S&P 500 index (SPX).
Andrew Strelzik, an analyst from BMO Capital Markets, wrote, “Starbucks’ balance sheet and growing free cash flow generation create opportunities to increase returns to shareholders.” He went on to say that, “We would not be surprised if Starbucks increases its returns to shareholders in the near term via a step-up in share repurchases.”
Strelzik also further pointed out that Starbucks has included in its strategy to diversify its business model across various geographies. This would see the company make their mark in some food and beverage day parts while still continuing with innovations in their marketing and loyalty program initiatives.
MT4 Chart: Starbucks
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