Earnings Cheat Sheet: Starbucks Glides Through Estimates; 85% Earnings Increase

Starbucks Corporation (SBUX) is an international coffeehouse chain that is involved in purchasing, roasting, and selling whole bean coffees. It sells brewed coffee, espresso drinks, blended beverages, complimentary food items, and various accessories and equipment. Starbucks reported their fiscal fourth quarter today and easily beat top and bottom line expectations.

Earnings: Earnings increased 85% to $0.37 a share ($399.3 million) from $0.20 a share ($199.4 million) last year.

Revenue: Revenue increased 17% to $2.83 billion from $2.42 billion last year.

Actual versus Wall Street Expectations: Starbucks earnings per share of $0.37 easily surpassed estimates of $0.32 per share. Revenue also beat at $2.83 billion from $2.77 billion expected.

Notable Stats: Comparable store sales increased 8%, driven by a 5% increase in traffic and a 2% increase in average ticket.

Consolidated operating margin improved 590 basis points to 14.1%; Non-GAAP operating margin increased 390 basis points to 14.3%.

Company announced a quarterly cash dividend of $0.13 per share.

Did You Hear That? “We completed fiscal 2010 with strong momentum throughout our business. Meaningful same store sales growth, coupled with the stronger financial discipline we have adopted within the organization, delivered the excellent results we reported, leaving us well positioned for our next stage of profitable growth,” commented Troy Alstead, cfo. “The strong margin improvement we achieved in our U.S. and International businesses reflects the hard work of our partners throughout the organization delivering top line growth while also driving efficiencies in our operations. As a result of Starbucks strong fiscal 2010 performance and the momentum we carried into the new fiscal year, we are increasing our EPS outlook for fiscal 2011 to a range of $1.41 to $1.47, representing 15% to 20% growth over fiscal 2010 non-GAAP EPS on a 52-week basis.”

Commentary: Shares of Starbucks (SBUX) have been rallying into earnings and are currently trading above their 50 DMA and 200 DMA. SBUX recently broke-out to new 52 week highs and is now at levels not seen since 2007. At its current price, SBUX has ample room to run to the upside, not hitting important resistance until about the $35 level. Starbucks shares are currently up significantly after hours (not shown on chart).

Disclosure: No positions in SBUX