We expect coffee giant
) to beat expectations when it reports first quarter fiscal 2013
results on Jan 24 after the market closes.
Why a Likely Positive Surprise?
Our proven model shows that Starbucks is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP:
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
), the difference between the Most Accurate estimate of 58 cents
and the Zacks Consensus Estimate of 57 cents, stands at
Zacks #3 Rank (Neutral):
Starbucks currently retains a Zacks Rank # 3 (Hold).
The combination of the stock's Zacks Rank #3 (Hold) and +1.75%
ESP makes us confident of a positive earnings beat on Jan 24.
What is Driving the Better Than Expected Earnings?
Starbucks' is gaining momentum with its strong market
standing, new product launches, rapid growth in China, the
flourishing channel development (CPG) business as well as the
solid turnaround in its U.S. business.
It delivered solid earnings results in the fourth quarter,
beating both Zacks as well as company expectations. In fact
the company has delivered positive earnings surprises in three of
the past four quarters. Moreover, after announcement of solid
fourth quarter results, Starbucks raised its forecast for
earnings, operating margins and global net new stores for fiscal
Most estimates were revised higher after announcement of the
third quarter results and the upbeat outlook for 2013. The Zacks
Consensus Estimate for fiscal 2013 grew 0.9% over the last 90
days reflecting year-over-year earnings growth of 20.3%. While
that for fiscal 2014, went up 1.6% over the same timeframe,
reflecting an earnings growth of 21.2%.
Starbucks has compelling growth drivers like La Boulange
bakery products, Verismo at-home-coffee machine, Evolution Fresh
juices, and K-Cups portion packs to sustain earnings momentum in
the first as well as future quarters of 2013. Overall, Starbucks
has a bright outlook for fiscal 2013, expecting continued robust
consolidated operating margin and earnings improvement in the
Other Stocks to Consider
Starbucks is not the only bullish firm this earnings season.
We also see likely earnings beats coming from the following
Krispy Kreme Doughnuts, Inc.
): Earnings ESP of +9.09% and Zacks Rank #1 (Strong Buy).
Bob Evans Farms Inc.
): Earnings ESP of +3.90% and Zacks Rank #1 (Strong Buy).
Chuy's Holdings Inc.
): Earnings ESP of +25.00% and Zacks Rank #2 (Buy).
BOB EVANS FARMS (BOBE): Free Stock Analysis
CHUYS HOLDINGS (CHUY): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
STARBUCKS CORP (SBUX): Free Stock Analysis
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