STARBUCKS CORPORATION REPORTS GLOBAL COMPARABLE STORE SALES ROSE 3% DURING FQ3

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Starbucks Corporation ($NASDAQ:SBUX) reported global comparable store sales rose 3% during FQ3. Average ticket was up 6% to offset a 3% decline in transactions during the quarter. Total revenue barely topped expectations with a tally of $8.15B. Comparable sales in North America increased 9%, driven by a 8% increase in average ticket. This is good news for Starbucks, as it indicates that their sales are continuing to grow.

However, the fact that transactions are down 3% is a cause for concern. It is possible that customers are visiting Starbucks less often, or that they are spending less when they do visit. Either way, this could have a negative impact on Starbucks’ market share and earnings in the long term.

Market Reaction

This news caused the stock to open at $84.7 and close at $83.7.

VI Analysis

Company’s fundamentals reflect its long term potential, below analysis on STARBUCKS are made simple by VI app. VI Star Chart shows that STARBUCKS is strong in growth, dividend, medium in profitability and weak in asset. STARBUCKS has an intermediate health score of 6/10 considering its cashflows and debt, might be able to safely ride out any crisis without the risk of bankruptcy. STARBUCKS is classified as ‘cheetah’, a type of company that achieved high revenue or earnings growth but is considered less stable due to lower profitability. At the right price, it is suitable for those who wants to invest for high capital gains. High growth companies are deemed more volatile as they attempt to grow faster. Starbucks Corp.oration is an American coffee company and coffeehouse chain. The company’s fundamentals reflect its long term potential.

Summary

Investors may be concerned about the company’s guidance for the fourth quarter, which calls for global comparable store sales to be in the “low single digits.” Stifel analyst Mark S. Astrachan said in a research note that the guidance was a “positive surprise,” but noted that it includes a headwind from loyalty program changes. Astrachan maintained his “hold” rating on the stock. “Starbucks’ long-term growth story is intact, but near-term concerns around comp deceleration, loyalty program changes, and increased investments could pressure the stock in the near-term,” he wrote.