The 10-second takeaway
For the quarter ended July 1 (Q3), Starbucks met expectations on revenue and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue expanded and GAAP earnings per share expanded significantly.
Gross margins dropped, operating margins expanded, and net margins increased.
Starbucks reported revenue of $3.30 billion. The 24 analysts polled by S&P Capital IQ expected a top line of $3.34 billion on the same basis. GAAP reported sales were 13% higher than the prior-year quarter's $2.93 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.43. The 28 earnings estimates compiled by S&P Capital IQ averaged $0.45 per share. GAAP EPS of $0.43 for Q3 were 19% higher than the prior-year quarter's $0.36 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 56.2%, 130 basis points worse than the prior-year quarter. Operating margin was 13.3%, 110 basis points better than the prior-year quarter. Net margin was 10.1%, 60 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $3.46 billion. On the bottom line, the average EPS estimate is $0.48.
Next year's average estimate for revenue is $13.50 billion. The average EPS estimate is $1.83.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 6,180 members out of 7,821 rating the stock outperform, and 1,641 members rating it underperform. Among 2,166 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,941 give Starbucks a green thumbs-up, and 225 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Starbucks is outperform, with an average price target of $64.52.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services recommend Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.