How Will Starbucks Fare In Q1 2020?

by Trefis Team
+16.42%
Upside
82.54
Market
96.10
Trefis
SBUX
Starbucks
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Starbucks (NASDAQ: SBUX) is slated to release its Q1 2020 (ended December 2019) results on January 28, 2020. Trefis details expectations from Starbucks in an interactive dashboard, parts of which are highlighted below. We believe that Starbucks’ Revenues will be nearly in line consensus and the Earnings will narrowly edge consensus. For full year 2020, we expect Starbucks to report revenues of $28.2 billion (vs. consensus estimate of $28.4 billion), which would be 6.3% higher than the previous year. Earnings are likely to be around $3.09 (vs. consensus estimate of $3.05), improved from the $2.92 reported in 2019, primarily due to higher revenues offset by a lower net income margin. Our forecast indicates that Starbucks’ Valuation is $96 per share, which is slightly higher than its current market price of roughly $93.

A] Revenue expected in line with Consensus

  • Total revenues have increased from $22.4 billion in 2017 to $26.5 billion in 2019.
  • Further, Trefis estimates Starbucks’ revenues to improve by 6.3% to $28.2 billion in 2020.
  • Revenue from all segments is expected to push the growth for 2020 with the Company Owned Stores segment expected to record the highest improvement in absolute numbers.

A separate interactive dashboard for Starbucks provides an in-depth view of Starbucks’ revenue trend and segment-wise revenue performance, along with forecast for 2020.

B] EPS to just edge Consensus

  • Starbucks’ 2019 earnings per share (EPS) is expected to be $3.09 per Trefis analysis, slightly higher than the consensus estimate of $3.05 per share.
  • An increase in revenues as detailed above, along with a lower share count, offset by a higher increase in total expenses, will drive the EPS increase compared to 2019.
  • As we forecast Starbucks’ Revenues to improve and Expenses to increase further in 2020 (6.3% vs 6.8%), it will result in a fall in Starbucks’ Net Income Margin figure from 13.6% in 2019 to 13.1% in 2020.

C] Stock Price Estimate slightly higher than Market Price

  • A trailing P/E multiple of 31.1x looks appropriate for Starbucks’ stock, which is slightly higher than the current implied P/E multiple of 30.4x.
  • As per Trefis, Starbucks 2020 revenue will be nearly in line with the market expectations, while earnings will be slightly higher compared to expectations. This forecast works out to a fair value of $96 for Starbucks’ stock, which is slightly higher than its current market price of around $93.

Additionally, you can input your estimates for Starbucks’ key metrics in our interactive dashboard for Starbucks’ pre-earnings, and see how that will affect the company’s stock price.

 

 

See all Trefis Price Estimates and Download Trefis Data here

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