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Starbucks Raised Its Guidance after Its Earnings Beat

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Starbucks

Starbucks (SBUX) posted its second-quarter earnings on April 25. For the quarter ending on March 31, Starbucks reported an adjusted EPS of $0.60 on revenues of $6.31 billion. The company’s adjusted EPS rose 13.2% YoY (year-over-year), while its revenues rose 4.5%.

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Stock performance

For the quarter, Starbucks outperformed analysts’ EPS estimate of $0.56, while its revenues were marginally short of analysts’ expectation of $6.32 billion. The company posted an SSSG (same-store sales growth) of 3.0%, which beat analysts’ estimate of 2.9%. After posting a strong second-quarter performance, Starbucks’s management raised its EPS guidance for fiscal 2019 to $2.75–$2.79 from an earlier estimate of $2.68–$2.73. The strong second-quarter performance and management’s higher EPS guidance led to a rise in Starbucks’s stock price. On April 26, the company hit a 52-week high of $77.52 before closing the day at $77.45, which represents a rise of 0.4% from the previous day’s closing price.

YTD performance

Since the beginning of this year, Starbucks has returned 20.3%. Starbucks has outperformed the broader equity market. The S&P 500 Index has returned 17.3%, YTD (year-to-date). During the same period, Dunkin’ Brands (DNKN) and McDonald’s (MCD) have returned 17.6% and 11.1%, respectively. The Consumer Discretionary Select Sector SPDR ETF (XLY), which invests in restaurant and travel companies, has returned 21.8% YTD.

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