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Starbucks SBUX shares have climbed 8% since it reported its Q4 2019 results at the end of October. Despite the climb, which some might have expected to be higher given its strong comparable sales growth, Starbucks stock rests roughly 9% below its 52-week highs.

Growth

Starbucks posted 5% global comps growth in the fourth quarter, which topped analysts’ expectations by over 1%. The international coffee giant’s sales growth was driven by the U.S. and China, with same-store sales up 6% and 5%, respectively. SBUX’s strength in its two key markets helped overall sales jump 7%.

Starbucks hopes to continue to expand its business in China, which includes partnerships with Alibaba BABA, as it fights off encroachment from local upstart Luckin Coffee Inc. LK. In the U.S., the company ramped up delivery through Uber Eats UBER. The Seattle giant’s digital ordering business has also boomed, especially in cities. Meanwhile, its loyalty rewards program membership grew 15% to 17.6 million active members.

Other Fundamentals

SBUX shares have climbed over 50% in the last two years, which tops the S&P 500’s 17%, its industry’s 26% average. Starbucks stock closed regular trading Wednesday at $92.46 a share, down about 9% off its 52-week highs, which could give the stock room to run heading into its Q1 fiscal 2020 earnings release.

SBUX is trading at 28.7X forward 12-month earnings estimates. This marks a premium compared to its industry’s 24.8X and its own three-year low of 18.6X. But investors have been willing to pay more for Starbucks for nearly all of the last decade and it has traded as high as 32.2X as recently as July 2019.

Meanwhile, the company returned $12 billion to shareholders in fiscal 2019 through buybacks and dividends. The firm also raised its quarterly dividend by 14% to $0.41 per share for 2020 to help its yield rest at 1.82% at the moment. 

Outlook

Looking ahead, our Zacks estimates call for Starbucks’ Q1 fiscal 2020 revenue to jump 6.8% to reach $7.08 billion. The firm’s full-year sales are projected to pop 7.1% to $28.38 billion, with 2021 expected to come in another 7.7% higher. These would both roughly match 2019’s 7.2% top-line growth.

At the bottom end of the income statement, SBUX’ adjusted Q1 earnings are projected to come in flat from the year-ago period at $0.75 per share. Peeking ahead, the company’s adjusted fiscal 2020 earnings are projected to pop 7.8%, with 2021 set to come in 11.5% higher.

earning report

Starbucks is tentatively set to release its Q1 fiscal 2020 results on January 28.

source: yahoo finance