Starbucks Shares Move Higher After Crushing Q3 Expectations

Coffee giant Starbucks reported its third quarter financial results this week and crushed estimates.

The company also raised its full-year forecast for earnings and revenue sending shares of the stock higher by over 6% in after-hours trading on Thursday.

The company reported that sales at its U.S. stores open at least a year saw a jump of 7%, driven by 3% traffic growth. China, which is the company’s second biggest market, saw same-store sales jump 6%. Analysts were predicting U.S. same-store sales to grow 4.4%.

For the third quarter, Starbucks reported earnings per share of 78 cents, compared to 72 cents expected. Revenue at $6.82 billion was also ahead of the $6.67 billion expected. Net income was $1.37 billion, or $1.12 a share. This is up from $852.5 million, or 61 cents, from the year ago quarter.

“Our two targeted long-term growth markets, the U.S. and China, performed extremely well across a number of measures as a result of our focus on enhancing the customer experience, driving new beverage innovation and accelerating the expansion of our digital customer relationships,” remarked CEO Kevin Johnson.

Looking ahead, the company has raised its full-year forecast for both earnings and revenue. Starbucks now expects adjusted, or non-GAAP earnings in the range of $2.80 or $2.82. Previously the range was $2.75 to $2.79 a share. Revenue is expected to grow 7%, while previously the company forecast a range of 5% to 7%.
Starbucks’ U.S. loyalty program saw a gain of 400,000 members during the quarter, bringing its total to 17.2 million.

“We know a lot more about our customers now, and it’s really fueling what we have in the pipeline for beverage innovation,” COO Roz Brewer stated.

The company also opened 442 net new stores, with about a third of the stores in China. “China is sort of a native delivery market versus the U.S. However, we have seen enough encouragement to go through a national launch,” Brewer said.

Earlier in the week Starbucks also announced an equity stake in restaurant tech company Brightloom.
Shares of Starbucks are up 41% this year so far.

Disclaimer: We have no position in Starbucks Corporation (NASDAQ: SBUX) have not been compensated for this article.