Starbucks Corp (NASDAQ:SBUX) Earnings Model
Author: Amit Pisipaty Published: April 10, 2021 1:25pm Category: Earnings Preview (Fiscal 2Q2021)
Notes from the Model Developer: My model takes into account the impact of the current COVID-19 vaccine rollout as well as improvements made by Starbucks to their business model in order to adapt to the environment of the pandemic. The Biden administration initially targeted May 1st as the day of open availability to all U.S. adults for COVID vaccinations, however, they are now expected to beat that date by a significant margin and open availability on April 19th. As a result, I expect the easing of social distancing restrictions through the summer to allow Starbucks to realize strong growth in comparable store sales for Q3 and Q4 of FY2021 due to increased indoor seating before normalizing in FY2022. Starbucks additionally made improvements to their point of sale and drive-through capabilities as a result of the pandemic, and management stated these factors as drivers of recovery for the Q1 results for FY2021. Going into FY2022, I expect the impact of these factors to lessen but still have a lingering positive effect into the future, with operating margins for FY2022 slightly higher than the comparable pre-COVID quarters from FY 2019 and FY2020. Finally, I have incorporated changes to the channel development revenue segment to account for decreased sales of packaged coffee products as COVID restrictions ease and item hoarding wanes. Overall, this model provides a bullish perspective for the future of Starbucks, with EPS estimates for FY2021 and FY2022 standing at the top of the range of analyst estimates.
Disclosure: The author of this article/model has no financial investment or other conflict of interest related to the subject company or other companies discussed. Any views made or implied in the content represent the author’s opinions.