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Did Starbucks stock account for profits while beating profits?

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Starbucks (NASDAQ: SBUX) is expected to release its results for the first quarter of fiscal 2021 on Tuesday, April 27. We expect Starbucks to beat consensus estimates for both revenue and profit. The company has reported better-than-expected earnings in each of the past four quarters, while revenues have exceeded consensus for three of the past four quarters. The company has seen a pick-up in demand over the past two quarters with the easing of lockdown restrictions and the start of the vaccination campaign. We expect the same to fuel the second quarter of fiscal 2021 results as well. Starbucks Rating is around $ 116 per share, which is the current market price of around $ 117. Watch our interactive dashboard analysis at Starbucks pre-profits: what to expect in the first quarter? for more details.

(1) Revenue expected ahead of consensus estimates in Q1

Trefis estimates Starbucks revenue for the second quarter of 2021 (ending March 2021) at around $ 7.1 billion, 4% above the consensus estimate of $ 6.8 billion. Starbucks revenue of $ 23.5 billion for fiscal 2020 (ended September 2020) was lower than the figure for fiscal 2019, as the pandemic forced restaurants to close and operate only in delivery or delivery mode. Overall, we forecast a revenue recovery to around $ 28.5 billion in fiscal 2021.

(2) EPS likely to beat consensus estimates

Starbucks second quarter 2021 earnings per share are expected to be $ 0.70 per Trefis analysis, above the consensus estimate of $ 0.53. The company’s net profit margin declined in 2020 due to much higher operating expenses. This took EPS from $ 2.92 in 2019 to $ 0.79 in 2020. Reopening restaurants, reducing restrictions and lower operating expenses are expected to improve profits in 2021. Overall, the company is likely to report EPS of around $ 3.17 in FY2021.

(3) Estimate of the share price in line with the current market price

Through our Starbucks Rating, with an EPS estimate of about $ 3.17 and a multiple of P / E just above 36.6x in fiscal 2021, that translates to a price of $ 116, which is the current market price of about $ 117.

Note: P / E multiples are based on the stock price at the end of the year and the reported (or expected) adjusted profit for the full year

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