Starbucks (NASDAQ: SBUX) is scheduled to report its fiscal Q3 2021 results on Tuesday, July 27. We expect Starbucks to beat the consensus estimates for revenues and earnings. The company has reported better than expected earnings in each of the last four quarters, while revenues beat consensus for two of the last four quarters. The company saw recovery in demand in the last couple of quarters as lockdown restrictions eased and with the start of the vaccination drive. We expect the same to spur the third-quarter of FY2021 (FY ends in September) results, as well. Our forecast indicates that Starbucks’ valuation is around $124 per share, which is almost 4% higher than the current market price of $119. Look at our interactive dashboard analysis on Starbucks’ pre-earnings: What To Expect in Q3? for more details.
(1) Revenues expected to be ahead of consensus estimates in Q3
Trefis estimates Starbucks’ fiscal Q3 2021 (ended June 2021) revenues to be around $7.54 billion, 4% above the $7.24 billion consensus estimate. Overall we expect Starbucks revenues to recover from the fall in FY 2020 and post revenues of around $28.5 billion for FY 2021 (ends Sep 2021).
(2) EPS likely to beat the consensus estimates
Starbucks’ Q3 2021 earnings per share (EPS) is expected to be $1.00 per Trefis analysis, above the consensus estimate of $0.77. The company’s net income margin fell in 2020 due to much higher operational expenses. The reopening of the restaurants, reduction in restrictions, and lower operational expenses are expected to improve the earnings in 2021. Altogether, the company is likely to report an EPS of around $3.17 in FY2021.
(3) Stock price estimate is 3.9% higher than the current market price
Going by our Starbucks’ valuation, with an EPS estimate of around $3.17 and a P/E multiple of 39.1x in fiscal 2021, this translates into a price of $124, which is around 4% higher than the current market price of $119.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
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