) is set to report second-quarter fiscal 2014 results on Apr 24,
before the market opens. Last quarter, the company delivered a
positive earnings surprise of 2.90%. Let's see how things are
shaping up for this announcement.
Factors to Consider This Quarter
In our view, second-quarter customer traffic could be hurt by
a tough winter in January and February which kept customers home.
Last quarter, Starbucks' U.S. sales slowed due to lower in-store
foot traffic as more consumers opted for online shopping during
the holiday season.
This trend could affect sales again in this quarter. Moreover,
a shift in the Easter timing could hurt comps. Margin gains due
to lower coffee costs could be partially offset by the pricing
actions for packaged coffee.
However, Starbucks' earnings are expected to improve in the
second half. In fact, food/beverage innovations,
digital/mobile/loyalty initiatives, single-serve products, La
Boulange bakery items, handcrafted cold carbonated beverages,
Evolution Fresh juices and Teavana tea could emerge as meaningful
top-line growth drivers in fiscal 2014.
Our proven model does not conclusively show that Starbucks is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is
not the case here, as you will see below.
Negative Zacks ESP:
The Earnings ESP is -1.79%.
Zacks Rank #4 (Sell):
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the retail/restaurants sector that have both a
positive Earnings ESP and a favorable Zacks Rank are:
Arcos Dorados Holdings Inc. Cla
), with Earnings ESP of +25.0% and a Zacks Rank #2 (Buy).
Ruby Tuesday, Inc.
) has an Earnings ESP of +11.11% and a Zacks Rank #3.
The Cheesecake Factory Inc.
), with Earnings ESP of +2.04% and a Zacks Rank #3.
ARCOS DORADOS-A (ARCO): Free Stock Analysis
CHEESECAKE FACT (CAKE): Free Stock Analysis
RUBY TUESDAY (RT): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis
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