Starbucks Expected To Report Higher Results--Earnings Preview

   By Andria Cheng 
 

Starbucks Corp. is scheduled to report fiscal fourth-quarter earnings after the close of trade on Thursday. Investors will be keen to see if the coffee-house chain can again post same-store sales growth of at least 5%, as it has for each of the past 18 quarters.

Here are some other things investors can expect:

EARNINGS FORECAST: Starbucks is expected to report earnings of 74 cents a share, up from 60 cents a share in the same period a year earlier, according to analysts surveyed by FactSet. The analyst estimate is the midpoint of Starbucks's July forecast for per-share earnings between 73 cents and 75 cents.

REVENUE FORECAST: Starbucks is expected to report sales of $4.24 billion, up from $3.80 billion in the year-earlier period, according to FactSet

STOCK REACTION: Starbucks shares have fallen 2.4% this year through morning trade Thursday, compared with a 7.4% gain for the S&P 500.

WHAT TO WATCH:

--COFFEE PRICES: Investors will expect an update on the recent spike in coffee prices, which are expected to pressure margins heading into 2015. Wells Fargo analysts said they would look for details on the company's commodity hedging, although they expect any pressure to be mitigated by cost cuts and the impact of a higher mix from food, which typically carries a higher margin.

--SODA UPDATE: Wells Fargo is also expecting an update on the company's June entry into the carbonated beverage market with the introduction of Fizzio handcrafted sodas. Analysts said channel checks suggest the business may have fallen short of expectations, citing feedback from baristas who have said the drinks are not very popular.

--JAPAN BUSINESS: Investors will listen for news on Starbucks' Japan business, after the company in September agreed to buy the 60.5% stake in that business it did not already own. Japan is the company's second-largest market.

--MOBILE PAYMENTS: Starbucks has said mobile payments represent over 15% of U.S. transactions in company-owned stores. Investors will look for an update on Apple Pay, after Apple (AAPL) said on its website that Starbucks will start to accept Apple Pay later this year.

-Andria Cheng; [e-mail]

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