Starbucks Corporation(NASDAQ:SBUX) just released its third-quarter report and things are looking bullish. It looks like a positive result overall, with revenues of US$4.2b beating forecasts by 2.0%. Statutory losses of US$0.58 per share were 2.0% smaller than the analysts expected, likely helped along by the higher revenues. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Starbucks
Taking into account the latest results, the consensus forecast from Starbucks' 30 analysts is for revenues of US$27.9b in 2021, which would reflect a notable 16% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to reduce 7.2% to US$2.65 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$27.7b and earnings per share (EPS) of US$2.60 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$83.13, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Starbucks analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$74.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Starbucks' growth to accelerate, with the forecast 16% growth ranking favourably alongside historical growth of 6.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 20% next year. So it's clear that despite the acceleration in growth, Starbucks is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$83.13, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Starbucks going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found3 warning signs for Starbucks(2 are potentially serious!) that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content?Get in touchwith us directly.Alternatively, email editorial-team@simplywallst.com.