Starbucks Corp (NASDAQ:SBUX) Earnings Model
Author: Shazaib Sahito Published: April 18, 2021 1:20pm Category: Earnings Preview (Fiscal 2Q2021)
Notes from the Model Developer: In Q1, Starbucks had beat earnings expectations by 10.91% ($0.61 vs $0.55 expected), but they had missed revenue expectations by 2.45% (6.75B vs 6.95 expected). Although shares stayed stagnant and weren't affected, much, shares had jumped on the news of a 10% rebound looking into the next year. My view on the company is bearish, and I see some more major signs of recovery towards the end of 2021, going into 2022. I took into to consideration of many factors such as many of the licensed store still being under used because of the low population density in many of these places. In addition, the vaccine outlook is still up in the air, as there is a lot of controversy regarding the safety of the vaccine, as it is not yet FDA approved, also the hike in overall cases and deaths from COVID-19 in January/February could have also affected Starbucks day to day operations, as if that wasn't enough, the main product of coffee beans, as raw material had been held up with the Suez Canal blockage, which I predict has had a negative affect, causing a low supply for Starbucks. Adding to costs for Starbucks, the Biden Administration also plans to hike corporate taxes late 2021 into 2022 which is also something to consider. All in all, I believe we are still in the midst of recovery, and Starbucks is being met with many challenges this quarter due to these reasons, I believe Q2 will have recovering comparable sales growth, and a slight decrease in operating expenses, given past history of Starbucks also not performing the best Q2, it makes my prediction a good fit. Starbucks is known to fall under the discretionary sector, making it cyclical, which is how I had predicted 2022 being in total recovery, but still showing a slight ups and downs.
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.