Starbucks Boosts Investor Confidence With Solid Fiscal Q4 Performance

Shares of Starbucks are up 29% year to date after a lackluster 2018 performance. 

Last week, Starbucks released a solid fiscal fourth-quarter earnings report. The coffee giant’s earnings and revenue were mostly in line with what investors were expecting, although the guidance was a bit lower than what Wall Street was calling for.

Starbucks stock is up 41% from a year earlier, but its shares are down slightly from its summer high of $99.72 per share. The recent drop is partly due to concerns over ongoing competition from Luckin Coffee in China, which is one of Starbucks’ most important markets. 

Let’s look at an overview of Starbucks’ fourth-quarter earnings, and what this means for the company going forward.

Starbucks reports solid Q4 results

During the fiscal fourth-quarter, Starbucks earned 70 cents per share, which was in line with what analysts were expecting. The company’s revenue reached $6.7 billion, which beat Wall Street’s forecasts of $6.67 billion.

But best of all, the company’s comparable sales were up in the U.S. and China. The company’s comparable sales grew by 6% in the U.S. and 5% in China. Overall, the company’s global comparable sales increased by 5%. In contrast, the company’s comparable sales grew by 3% in the fourth quarter of 2018.

Starbucks also grew its global stores by 7% over the past year. The company plans to open an additional 2,000 stores worldwide.

Going forward, the company’s guidance was a bit lower than what Wall Street was calling for. Starbucks expects its full-year earnings to fall between $3 and $3.05 per share, as opposed to the $3.07 analysts were calling for. But investors seemed pleased with the earnings report nonetheless. 

What’s next for the coffee giant?

In spite of the solid performance, shares of Starbucks haven’t moved too much in the \ days following the earnings report. In fact, as of this writing, the shares are trading down slightly. However, this doesn’t seem to be anything to be concerned about. 

Wall Street reacted favorably to the earnings report, with three analysts reiterating a buy rating on the stock. And a Jefferies analyst praised the company for maintaining a firm hold on its market in China. Overall, Starbucks is considered a moderate buy. 

Starbucks should continue to do well thanks to its strong customer loyalty, the innovative new partnership with Nestle, and impressive performance from its loyalty program.