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Earnings on Tap: Starbucks

Emerging-markets expansion, channel-development efforts, and a complementary brand portfolio should help Starbucks sustain modest revenue growth over the long run.

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 Starbucks (SBUX) is scheduled to report fiscal first-quarter numbers after the closing bell Thursday. Analysts are expecting earnings of $0.57 per share, up from $0.50 per diluted share in the year-ago period.

In the previous quarter, the company's earnings beat Wall Street estimates, driven by growth in both U.S. and Asian markets as well as its consumer products group. Earnings per share came in at $0.46 on operating income of $519.6 million for the fourth quarter of fiscal year 2012.

Starbucks also raised its full-year outlook for 2013. It expects to earn $2.06-$2.15 per share for the year, while revenues are expected to rise by 10%-13%.

The company also revealed plans to open 1,300 new stores worldwide in fiscal year 2013, of which 600 stores are expected to be in the Asia-Pacific region, with most of them in China.

Morningstar analyst R. J. Hottovy doubts if the firm can return to top-line growth rates of 20% achieved before 2007. But Starbucks' channel-development efforts (VIA, K-Cups, and Verismo), emerging-markets expansion (namely China, India, and Brazil), and a complementary brand portfolio (Evolution Fresh, La Boulange, and Teavana) should sustain low to midteen average revenue growth and at least high-teen cash flow growth during the next decade. 



Gazala Parveen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.