Starbucks (NASDAQ:SBUX) Issues Quarterly Earnings Results

Key Points

• Starbucks beat quarterly earnings expectations: EPS came in at $0.80 versus the $0.72 consensus, while revenue of $9.14 billion fell slightly short of the $9.22 billion estimate. Global comparable sales rose 7.2% and operating margin expanded to 14%.
• Management expects continued earnings recovery in fiscal 2027, forecasting roughly 4% North American comparable-sales growth, a 13.5%–14% operating margin and EPS of $3.15–$3.25. Consolidated revenue is nevertheless expected to decline about 1%, partly due to the transition of Starbucks China’s retail operations to a licensed joint venture.
• Shareholder returns are increasing: Starbucks raised its quarterly dividend to $0.63 per share and plans approximately $1 billion in fiscal 2027 share repurchases. Analysts maintain a “Moderate Buy” consensus, though several firms have recently lowered price targets amid the stock’s elevated valuation.

Starbucks (NASDAQ:SBUX - Get Free Report) issued its quarterly earnings results on Thursday. The coffee company reported $0.80 EPS for the quarter, topping analysts' consensus estimates of $0.72 by $0.08, FiscalAI reports. Starbucks had a negative return on equity of 34.10% and a net margin of 5.17%. The company had revenue of $9.14 billion during the quarter, compared to analyst estimates of $9.22 billion.

Here are the key takeaways from Starbucks' conference call:

• Fiscal 2026 results exceeded expectations: Q4 global comparable sales rose 7.2%, U.S. comparable sales increased 7.7%, operating margin expanded 450 basis points to 14%, and EPS grew approximately 54% to $0.80.
• Starbucks expects continued earnings recovery in fiscal 2027, guiding to approximately 4% North America comparable-sales growth, 13.5%–14% operating margin, and EPS of $3.15–$3.25. Management said it is ahead of schedule toward its fiscal 2028 framework, supported by sales leverage and ongoing savings from its $2 billion cost program.
• Fiscal 2027 consolidated revenue is expected to decline approximately 1%, primarily because of the transition of Starbucks China’s retail operations to a licensed joint venture, along with lower channel-development revenue and fewer North American company-operated openings.
• Management highlighted several growth opportunities, including more than 2,000 North American coffeehouse uplifts, integrated delivery in the Starbucks app, personalized digital ordering, afternoon menu and beverage platforms, and approximately 1,200 net new global coffeehouses in fiscal 2027, mainly internationally.
• Starbucks plans to return capital to shareholders through its 16th consecutive annual dividend increase to $0.63 per share and approximately $1 billion in fiscal 2027 share repurchases, while maintaining an investment-grade balance sheet.

Starbucks Stock Performance

Shares of SBUX stock traded up $2.31 during mid-day trading on Thursday, reaching $105.51. The company's stock had a trading volume of 11,048,490 shares, compared to its average volume of 8,115,513. Starbucks has a 1-year low of $77.99 and a 1-year high of $110.51. The company has a market cap of $120.28 billion, a P/E ratio of 60.64, a PEG ratio of 1.44 and a beta of 0.98. The firm's 50-day moving average is $99.25 and its two-hundred day moving average is $99.55.

Starbucks Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, November 27th. Shareholders of record on Friday, November 13th will be issued a $0.63 dividend. This is a boost from Starbucks's previous quarterly dividend of $0.62. The ex-dividend date of this dividend is Friday, November 13th. This represents a $2.52 annualized dividend and a yield of 2.4%. Starbucks's payout ratio is presently 144.83%.

Starbucks News Roundup

Here are the key news stories impacting Starbucks this week:

• Positive Sentiment: Wall Street expects another quarter of positive same-store sales growth, supporting hopes that improvements in coffee quality, service and the customer experience are gaining traction. Starbucks stock has risen roughly 24% this year. Starbucks is about to report earnings. Here's what to expect
• Positive Sentiment: Analysts anticipate fiscal fourth-quarter earnings of approximately $0.71 per share on $9.23 billion in revenue. A beat, particularly on comparable sales or margins, could reinforce confidence in CEO Brian Niccol’s turnaround strategy. Starbucks Likely To Report Higher Q4 Earnings
• Positive Sentiment: Investors are also watching whether Starbucks generated enough free cash flow to support its dividend, following the company’s latest dividend increase and continued annual payout-growth streak. Starbucks’ Dividend Rests on Free Cash Flow
• Neutral Sentiment: The earnings release is the immediate focus for investors, with attention on same-store sales, operating margins, China performance, full-year guidance and management’s outlook for the turnaround. Options markets imply a potentially large post-earnings move. Starbucks Q4 Earnings Are on October 29
• Negative Sentiment: Although expectations have improved, several analysts have reduced price targets. One fair-value estimate was lowered from about $112.23 to $109.93, suggesting a more cautious view after the stock’s strong advance and elevated valuation. Starbucks Stock Sees Modest Fair Value Cut
• Negative Sentiment: Starbucks faces renewed competition from McDonald’s, whose holiday menu includes seasonal beverages that compete with Starbucks’ important holiday offerings. McDonald’s or Starbucks Holiday Menu

Insider Activity at Starbucks

In other news, CEO Brady Brewer sold 2,229 shares of Starbucks stock in a transaction dated Friday, September 4th. The shares were sold at an average price of $105.60, for a total transaction of $235,382.40. Following the sale, the chief executive officer directly owned 73,149 shares in the company, valued at approximately $7,724,534.40. The trade was a 2.96% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders have sold 6,687 shares of company stock worth $685,935. 0.03% of the stock is currently owned by company insiders.

Wall Street Analyst Weigh In

Several research firms recently commented on SBUX. Mizuho cut their target price on shares of Starbucks from $115.00 to $105.00 and set a "neutral" rating for the company in a research note on Friday, October 23rd. Wells Fargo & Company dropped their price objective on shares of Starbucks from $125.00 to $120.00 and set an "overweight" rating on the stock in a report on Wednesday, October 21st. Guggenheim initiated coverage on shares of Starbucks in a research report on Monday, August 3rd. They set a "buy" rating for the company. BMO Capital Markets reiterated an "outperform" rating and issued a $130.00 target price (up from $120.00) on shares of Starbucks in a research note on Thursday, July 30th. Finally, Robert W. Baird decreased their target price on Starbucks from $124.00 to $115.00 and set an "outperform" rating on the stock in a research report on Friday, October 2nd. Twenty-four investment analysts have rated the stock with a Buy rating, twelve have given a Hold rating and four have given a Sell rating to the company's stock. According to MarketBeat.com, Starbucks has a consensus rating of "Moderate Buy" and an average price target of $110.14.

About Starbucks

Starbucks Corporation is a global specialty coffee company headquartered in Seattle, Washington. Founded in 1971, the company operates and licenses coffeehouses under the Starbucks brand, serving brewed coffee, espresso beverages, teas, cold drinks, food, and other ready-to-consume products.

In addition to its company-operated and licensed stores, Starbucks sells packaged coffee, tea, and single-serve products through grocery retailers, convenience stores, and other distribution channels.

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