Will Starbucks’ Stock Gain Following Q1 Earnings?

SBUX: Starbucks logo

Starbucks’ stock (NASDAQ: SBUX) is scheduled to report its fiscal Q1 FY 2022 results on Tuesday, February 1. We expect Starbucks to beat the consensus estimates for earnings and revenues. The company has reported better than expected earnings in each of the last four quarters. The company saw recovery in demand as lockdown restrictions eased and higher vaccination rates with both U.S. and International segment leading the recovery. We expect the same to continue the first-quarter of FY2022 (FY ends in September) results, as well. Our forecast indicates that Starbucks’ valuation is around $136 per share, which is 40% higher than the current market price of $96. Look at our interactive dashboard analysis on Starbucks’ earnings preview: What To Expect in Q1? for more details. 

(1) Revenues expected to be above consensus estimates 

Starbucks revenues for full-year 2021 were $29.01 billion – up 23.6% y-o-y, as the revenues recovered after opening up of lockdowns and ease in restrictions. Trefis estimates SBUX’s fiscal Q1 FY 2022 (ended Dec 2021) revenues to be around $8.15 billion, above the $7.97 billion consensus estimate. Our dashboard on Starbucks revenues offers more details on the company’s operating segments along with our forecast for the next two years.

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(2) EPS likely to beat the consensus estimates

Starbucks’ Q1 FY 2022 earnings per share (EPS) is expected to be $0.89 per Trefis analysis, above the consensus estimate of $0.79. The company’s  net income margin recovered in 2021 due to the reopening of the restaurants, and reduction in restrictions. We don’t expect much change in net income margin in FY 2022. Altogether, the company is likely to report an EPS of around $3.58 in FY2022.

(3) Stock price estimate is 40% higher than the current market price

Going by our Starbucks’ valuation, with an EPS estimate of around $3.58 for FY 2022 and a P/E multiple of 38.1x, translates into a price of $136, which is 40% higher than the current market price of $96.

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

Further, our analysis of Starbucks’ vs. Texas Roadhouse finds Starbucks to be a better investment option. Check out how Starbucks’ Peers fare on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Jan 2022
MTD [1]
YTD [1]
Total [2]
 SBUX Return -18% -18% 72%
 S&P 500 Return -9% -9% 94%
 Trefis MS Portfolio Return -14% -14% 240%

[1] Month-to-date and year-to-date as of 1/26/2022
[2] Cumulative total returns since the end of 2016

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