Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Starbucks reports in-line Q3 earnings as sales miss on China weakness; shares up

Published 07/30/2024, 04:51 PM
Updated 07/31/2024, 05:02 AM
© Reuters.
SBUX
-

Investing.com - Starbucks reported Tuesday mixed fiscal third-quarter results, with earnings matching and revenue missing Wall Street estimates as weaker sales in China weighed. 

Starbucks Corporation (NASDAQ:SBUX) shares climbed over 2% in premarket trade Wednesday.

Starbucks reported earnings of $0.93 on revenue of $9.1 billion. Analysts polled by Investing.com anticipated EPS of $0.93 cents on revenue of $9.25B.

The miss on the top line comes as economic weakness in China, a key market segment for the company, continues to weigh on spending. 

Global comparable store sales declined 3% missing estimates for a 2.7% decline. 

North America comparable store sales fell 2%, though weakness was kept in check by price hikes.

China comparable store sales declined 14%, driven by a 7% decline in both average ticket and comparable transactions. 

In the wake of the report, KeyBanc Capital Markets analysts trimmed their Starbucks EPS estimates for fiscal 2024 and 2025 to $3.53 and $3.93, respectively "to reflect slightly lower" near-term (NT) comparable sales growth.

Analysts maintained a Sector Weight rating on the stock, stating they "believe the stock’s current valuation at 21.5x FY24 EPS fairly balances the NT uncertainty with its potential to return to sustained growth over the LT."

Meanwhile, TD Cowen analysts said SBUX "is embracing new avenues for stock appreciation including newly identified G&A savings and the first acknowledgement of exploring strategic alternatives for the China business."

Analysts reaffirmed a Hold rating and the price target of $81 on the stock as they "do not expect this path to generate multiple expansion."

Yasin Ebrahim contributed to this report.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.