Can Starbucks (SBUX) Keep the Earnings Surprise Streak Alive?




 

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Starbucks (SBUX), which belongs to the Zacks Retail - Restaurants industry, could be a great candidate to consider.

This coffee chain has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 10.23%.

For the last reported quarter, Starbucks came out with earnings of $0.75 per share versus the Zacks Consensus Estimate of $0.65 per share, representing a surprise of 15.38%. For the previous quarter, the company was expected to post earnings of $0.59 per share and it actually produced earnings of $0.62 per share, delivering a surprise of 5.08%.

Price and EPS Surprise

Thanks in part to this history, there has been a favorable change in earnings estimates for Starbucks lately. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an earnings beat, particularly when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Starbucks currently has an Earnings ESP of +3.29%, which suggests that analysts have recently become bullish on the company's earnings prospects. This positive Earnings ESP when combined with the stock's Zacks Rank #2 (Buy) indicates that another beat is possibly around the corner. We expect the company's next earnings report to be released on April 25, 2019.

With the Earnings ESP metric, it's important to note that a negative value reduces its predictive power; however, a negative Earnings ESP does not indicate an earnings miss.

Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.

Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.


Is your investment advisor fumbling your financial future?
See how you can more effectively safeguard your retirement with a new Special Report, "4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future." Click to get your free report.

Starbucks Corporation (SBUX) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research
COMMENTS

More Related News

Why the Earnings Surprise Streak Could Continue for Lamb Weston (LW)
Why the Earnings Surprise Streak Could Continue for Lamb Weston (LW)

Lamb Weston (LW) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Will Conagra (CAG) Beat Estimates Again in Its Next Earnings Report?
Will Conagra (CAG) Beat Estimates Again in Its Next Earnings Report?

Conagra (CAG) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Starbucks (SBUX) and GrubHub (GRUB) Surge This Month: Which is the Better Buy?
Starbucks (SBUX) and GrubHub (GRUB) Surge This Month: Which is the Better Buy?

Millennial stocks have been on the rise this past month,

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.