Starbucks Stock Rose Due to Strong First-Quarter Earnings



First-quarter earnings

Starbucks (SBUX) posted its earnings for the first quarter of fiscal 2019 after the market closed on January 24. For the quarter ending on December 30, the company posted an adjusted EPS of $0.68 and revenues of $6.63 billion. The company’s revenues increased 9.2% year-over-year, while its adjusted EPS grew 17.2%.

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Stock performance

For the first quarter, Starbucks outperformed analysts’ EPS expectations of $0.65 and revenue expectations of $6.49 billion. The company also beat analysts’ SSSG (same-store sales growth) estimate of 2.8%. The SSSG was 4.0% due to a strong performance in the Americas segment and the China/Asia-Pacific segment. In the Americas segment, the growth in beverage sales was driven by a strong performance from the espresso and brewed platforms, which drove the company’s SSSG.

The better-than-expected first-quarter performance in fiscal 2019 appears to have increased investors’ confidence, which led to a rise in the company’s stock price. Starbucks was trading ~2.0% higher in after-hours trading on January 24.

YTD stock performance

After returning 12.1% last year, Starbucks’s stock price has increased 0.5% YTD (year-to-date). During the same period, Dunkin’ Brands (DNKN) and McDonald’s (MCD) have returned 10.4% and 8.9%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests ~8.4% of its holdings in restaurant and travel companies, has returned 6.9% YTD.

Series overview

In this series, we’ll analyze Starbucks’s first-quarter performance. We’ll compare Starbucks’s earnings with analysts’ expectations. We’ll also discuss management’s guidance for fiscal 2019. First, we’ll discuss Starbucks’s first-quarter revenues.


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