Inspiring Q42019 earnings report due to be released Jan. 23 could enable Starbucks shares (SBUX) to update its highs of July 2019 if Starbucks will follow the scenario of many rising shares of different companies on the US stock market that performed well in 2019.
The Starbucks shares today is still $6 below its highs recorded last summer when it reached $99.72 per share. Taking into account than it gained already 78% over the last 18 months and made a correction to $81 in Nov. 2019 any inspiring earnings report could push the price above the record highs near $100.
However, this scenario will be active only if the company's shares will be traded above Nov. 2019 lows, not below the support level of $80. In case the support level will be broken below $80 investors should be aware of the growing downside risk for Starbucks shares. In this scenario further slide of the price to $70 or even to $65 per share should be kept in mind.
Pic 1. Starbucks share price
Starbucks (SBUX) became a winner in a very different type of market in 2005-2010 including the period of financial crisis in 2008-2009. That's may be a history, but it shows a remarkable ability of the company to adopt to a different consumer sentiment.
Pic 2. Starbucks statistics (2005-2010)
Source: The Motley Fool analytics
According to the official website of the Company the total number of Starbucks stores worldwide is almost twice as high as in 2010 reaching for now more than 31,000. Starbucks reported strong surplus in revenues from $6.3 billion in Q32018 to $6.75 billion in Q32019 with a market expectation (according to Investing.com) of $7.1 billion in revenues in Q42019. EPS (earning per share) is expected to be near $0.76 (same level as a year before), dividends announced at $0.41 per share in Nov 19 vs $0.36 a year before.
Pic 3. Starbucks Earnings (expectations and facts)
Notable advantages of Starbucks business model are in a good balance between technology innovations and emotional personal connections with a customer: the staff is motivated to support personalized customer interaction and friendly atmosphere even when customers use coffee chain's smartphone application. Starbucks recently created digital partnership with Alibaba (BABA) for online orders in China, a vast market. The launch of oat milk drinks and similar vegan-friendly beverages is a smart move to extend the loyal audience.
The company extends personal attitude to its employees when every one of them can pretend for a small part of the company's financial result: they are partners of Starbucks. For everyone interested the business model and philosophy of the company could be found in a book of Starbucks CEO Howard Schultz "Pour your heart into it: How Starbucks built a company one cup at a time".
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
Indiscriminate reliance on illustrative or informational materials may lead to losses.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2021 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.