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Starbucks’s Q2 Earnings: Analysts’ Expectations

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Apr. 18 2019, Published 12:41 p.m. ET

Analysts’ expectations

Analysts expect Starbucks (SBUX) to post an adjusted EPS of $0.56 in the second quarter of fiscal 2019—a rise of 5.7% from $0.53 in the second quarter of fiscal 2018. The revenue growth and share repurchases in the last four quarters are expected to drive the company’s EPS during the quarter. The decline in the EBIT margin and higher effective tax rate are expected to offset some of the increase in the EPS.

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Analysts expect Starbucks’s EBIT margin to fall from 16.2% in the second quarter of fiscal 2018 to 14.9%. The licensing of the CPG and foodservice businesses and higher SG&A expenses are expected to lower the company’s EBIT margin. The sales leverage from positive SSSG and lower depreciation and amortization expenses are expected to offset some of the declines in the EBIT margins.

For the quarter, the company’s effective tax rate is expected to be 22.9%—compared to 19.1% in the same quarter the previous year.

From the beginning of the third quarter of fiscal 2018 until the end of the first quarter of fiscal 2019, Starbucks has repurchased 104.1 million shares for ~$5.60 billion. At the end of the first quarter of fiscal 2019, the company had the authorization to repurchase 96.8 million more shares under the current authorization.

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Peer comparisons

For the comparable quarter, analysts expect Dunkin’ Brands (DNKN) to post EPS growth of 0.4%, while McDonald’s (MCD) EPS is expected to fall 1.5%.

Outlook

For fiscal 2019, Starbucks’s management expects its adjusted EPS to be $2.68–$2.73, which represents a rise of 10.7%–12.8% from $2.42 in fiscal 2018.

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