Beverage and food momentum continue, with both breakfast and lunch food growing nicely, analysts said. In the long term, Starbucks' growing tea program could contribute to the low-teens in retail sales, with food contributing 25%.
In 2014 the coffee retailer reported earnings of $2.66 per share, higher than last year's $2.19 per share. Starbucks also posted revenue of $16.44 billion in 2014, versus $14.89 billion in 2013.
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Jefferies analysts forecast that Starbucks will earn $3.12 per share and $3.60 per share in 2015 and 2016, respectively. They also anticipate revenue of $18.99 billion and $21.23 billion in 2015 and 2016, respectively.
"We continue to find Starbucks to be the highest quality large cap story in restaurants," Jefferies said.
Separately, TheStreet Ratings team rates STARBUCKS CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate STARBUCKS CORP (SBUX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 13.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 83.09% and other important driving factors, this stock has surged by 27.07% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- STARBUCKS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STARBUCKS CORP turned its bottom line around by earning $2.71 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($3.12 versus $2.71).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 81.8% when compared to the same quarter one year prior, rising from $540.70 million to $983.10 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, STARBUCKS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SBUX Ratings Report