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What Analysts Expect from Starbucks’s Fiscal 4Q17 Earnings

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Fiscal 4Q17 expectations

In fiscal 4Q17, analysts are expecting Starbucks (SBUX) to post revenue of $5.8 billion, a rise of 1.9% from $5.7 billion in fiscal 4Q16. Revenue growth is expected to be driven by the addition of new restaurants and positive SSSG (same-store sales growth).

At the end of fiscal 3Q17, Starbucks operated 26,736 restaurants. At the end of fiscal 4Q16, it operated 538 more company-owned restaurants and 1,113 franchised restaurants. The addition of these new restaurants and the restaurants opened in fiscal 4Q17 are expected to drive the company’s revenue.

Analysts are expecting the company’s SSSG to be driven by growth in Starbucks Rewards members, food and beverage innovations, implementation of technological advancements, and growth in revenue from its Channel Development segment.

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At the end of fiscal 3Q17, the company had 13.3 million active Starbucks Rewards members, which represents a growth of 8.0% from the previous year. Through personalization, the company has been able to target specific messages and offers to individual customers, which probably contributed to revenue growth.

During the quarter, the company launched new and improved Bistro Boxes, Seared Steak, and Egg Wrap. In beverages, it introduced the Iced Cascara Coconut Milk Latte, the Iced Coconut Milk Mocha Macchiato, Nitro Freddo, and the Whiskey Barrel-Aged Sulawesi cold brew.

Moving to the Channel Development segment, Starbucks introduced Teavana Infusions, a flavored platform made from real fruits and botanicals. The four flavors of the ready-to-drink platform launched in February 2017 in partnership with Anheuser-Busch are also expected to drive the segment’s revenue.

Peer comparisons

During the quarter, Starbucks’s peers Dunkin’ Brands (DNKN) and Domino’s Pizza (DPZ) posted revenue growth of 8.2% and 13.6%, respectively. Revenue for McDonald’s (MCD) fell 10.4%.

Outlook

For the next four quarters, from fiscal 4Q17 to 3Q18, analysts are expecting Starbucks to post revenue of $24.2 billion, which represents a growth of 8.2% from $22.4 billion in the corresponding four quarters of the previous year.

Next, let’s look at analysts’ estimates for EPS for fiscal 4Q17.

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