What to watch for with the Starbucks' earnings report
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Starbucks Corporation (NASDAQ:SBUX) fell 0.53% just a few hours ahead of the company's FQ1 earnings report. There is a caution vibe into the report with the coffee chain stock down about 16% over the last six weeks on elevated concerns of the impact of inflation and staffing shortages on the company's bottom line. Some nuggets from analysts on what to expect from Starbucks are posted below.
Baird analyst David Tarantino: "Heading into the FQ1 report, we highlight potential for sales disruptions from omicron and possibly some company-specific factors to lead to a relatively uninspiring fundamental update. We are optimistic omicron-related volatility will prove short-lived, but we still see some risk to the consensus EPS projection for F2023 when combining an uncertain sales outlook and prospects for hefty input cost inflation. So, while we remain positive on longer-term fundamentals for SBUX, we continue to believe the near-term risk/reward is more balanced at current valuation metrics."
Quo Vadis analyst John Zolidis: "We like the company's accelerating growth profile following some retrenchment during Covid as well as other factors which we outline in the linked notes. For the quarter, we expect to hear that omicron hurt the December results, with staffing challenges being the largest factor. However, we also believe that SBUX should maintain its FY22 outlook, reflecting conservatism in the initial outlook. Overall we do not anticipate that this will be a major catalyst for the shares but like the name for incremental buyers on the pull-back, which has brought the valuation back in-line with five-year average forward multiples."
UBS analyst Dennis Geiger: "We'd view a reiteration of implied FY22 EPS guidance of at least $3.40 (at least 10% growth) positively given current pressures w/ China gov't restrictions, US COVID headwinds, and cost inflation. Although industry/macro pressures somewhat limit near-term visibility, we believe SBUX remains better positioned than most peers to manage labor shortages over time given leading benefits & wage investments (unionization also a focus). We believe many pressures are largely transitory, and view brand strength, consumer demand, and LT growth potential as intact, and we expect SBUX is well positioned as headwinds subside."
On the conference call, Starbucks (SBUX) may address the effort by employees at 50 stores to unionize and what the company anticipated to happen nationally on that front.
Dig into the consensus earnings numbers on SBUX.