Starbucks’ Stock To See Little Movement Past Q3?

[Note: Starbucks
SBUX
’ fiscal year 2022 ended October 2, 2022]

Starbucks stock (NASDAQ
NDAQ
: SBUX), the world’s leading roaster, marketer, and retailer of specialty coffee worldwide, is scheduled to report its Q3 2023 results on Tuesday, August 1. We expect SBUX stock to see little movement with revenues matching and earnings beat expectations slightly in its second-quarter results. The company’s Q2 operating margins expanded from 13% in 2022 to 14.3% in 2023, but was still lower than the 14.5% it achieved in Q1, primarily driven by investments in growth in labor, part of which represent the reinvention plan, inflation, and deleveraging in China. We expect a similar trend to continue into the fiscal third quarter as well. Also, the company could see some pressures from greater exposure to China (10% of sales come from there), unionization, and a new CEO appointed this year. It’s possible that Starbucks’ operating trends will be volatile in the next few quarters, but the long-term outlook is bright for this business as it capitalizes on increasing customer satisfaction across its selling footprint. For the full-year 2023, Starbucks expects revenue to be up 10% to 12% this fiscal year, with earnings per share up 15% to 20%.