By Todd McDonald, Analyst
Starbucks (SBUX) is scheduled to report Q2 2013 earnings after the close of trading on Thursday, April 25. Results are typically available several minutes after the closing bell, and will be followed by a conference call at 5:00 p.m. ET.
Outliers and Strategy
- Earnings Per Share: The value for this measure typically compares with consensus estimates. The exception is if a non-GAAP figure is present. The estimate is $0.48, the midpoint of analysts' range of $0.47 to $0.52 (source: Yahoo Finance).
- Revenues: Revenues are seen growing 12.10% year over year to $3.58 billion.
- Earnings Per Share Guidance (FY 2013): In the Q1 2013 release, Starbucks guided FY 2013 EPS in the range of $2.06 to $2.15. The current Street estimate is for FY 2013 EPS of $2.16, with a high estimate of $2.25.
- Comparable-Store Sales: Zack's Investment Research estimates that the company will report 6% growth in global comparable-store sales.
- Sympathy Plays: Green Mountain Coffee Roasters (GMCR), Dunkin' Brands (DNKN), and Coffee Holding Co. (JVA).
- Implied Volatility: The average move after earnings over the past eight quarters has been 4.59%, in line with what options premiums are pricing in.
- April 23: Information Resources named the Starbucks K-Cup offering as a top 10 "New Product Pace Setter" for food and beverage, due to strong demand. More than 850 million Starbucks K-Cups have been sold since the launch in November 2011.
- April 15: According to a post on StreetInsider.com, UBS reiterated its Buy rating on Starbucks, while raising its price target to $66 from $64. The firm cites a highly correlated consumer study that implies a solid U.S. comparable-store sales result.
- April 4: Starbucks announced an aggressive growth plan for the Southeast Asian markets, with plans to add 100 stores in Indonesia, and another 100 stores in the Philippines over the next three to four years. There are currently 700 stores in the region.
- April 4: Goldman Sachs reiterated its Buy rating on Starbucks, with a price target of $70, according to a post on StreetInsider.com. Analyst Michael Kelter points to a loyal customer base and an increasing adoption of Starbucks as a viable lunch destination.
Starbucks has maintained pace with the broader market, rising approximately 11% year to date. The company's shares are breaking out of consolidation and bouncing off a trendline from the Oct. 23 low. The moving averages show increasing momentum, as shares approach an all-time high of $62, set in April 2012. If results surprise to the upside, look for some resistance at the $62 level. Should earnings disappoint, support can be found near $56, followed by $54.
Starbucks has bounced back this quarter, thanks in part to an improving economic backdrop, decreasing commodity prices, international expansion, and new product offerings. With shares near an all-time high, this release could prove to be an inflection point, either breaking to all time-highs or settling into a longer-term range. Look to guidance and comparable-store sales for a reliable signal.
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