Starbucks Corporation (NASDAQ:SBUX), the largest coffee-maker in the world, reports fiscal first quarter earnings Sept. 22 after the stock market closes. What can we expect from the Seattle brewing behemoth?
In the last year, things have somewhat cooled off for SBUX stock, which is up 7.6%, trailing both the Nasdaq Composite’s 10.4% gains and the S&P 500 Index’s 9.8% return over that time. That’s a different story from the last five-year period, when SBUX stock trounced the benchmarks and roared to 246% gains while more than tripling its dividend.
So what should investors look for on Thursday? Will the fierce rival of Dunkin Brands Group Inc (NASDAQ:DNKN) march to new all-time highs or retreat?
First and foremost, investors will keep their eyes to Wall Street’s quarterly estimates. Analysts expect CEO Howard Schultz’s caffeinated powerhouse to earn about 80 cents per share, a 12.7% increase from the same period a year before. Wall Street is also looking for revenue of $4.8 billion, a 13.2% improvement from the prior year’s period.
But those aren’t the only things SBUX investors should listen for. The early success of three initiatives should be in focus with Thursday’s earnings call, so pay attention.
Starbucks Delivery Service
Every caffeine-craving working-age adult would kill to see a Starbucks delivery service. Thankfully, that’s not necessary, as SBUX announced back in October plans to usher your coffee straight to your door:
“Starbucks Delivery was announced on Thursday by company CEO Howard Schultz. Schultz didn’t say when exactly the service would launch or where it would be available. What he did say was that it would likely start in the second half of 2015 …”
InvestorPlace‘s story on the delivery plans adds another tidbit about the mysterious service:
“The delivery service will work with the company’s mobile app, which already allows customer to place orders before reaching a store.”
So while we won’t see any early results of Starbucks’ bold delivery strategy, SBUX may shine more light on its plans as we head toward mid-2015.
Starbucks Digital Moves
You normally wouldn’t think of a coffee roaster as being at the forefront of technological changes, but Starbucks is. In 2013, it announced that it was ditching AT&T Inc. (NYSE:T) in favor of Google Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), who would become Starbucks’ wi-fi provider in all 7,000 of its U.S. stores.
Perhaps more importantly, the Starbucks app has been enormously popular and is being used as a way to streamline service. The success of the Starbucks app has been nothing short of remarkable: 90% of all mobile payments in the U.S. were through the Starbucks app in 2013, and in 2014 the company bragged that as much as 15% of its U.S. sales came from the app directly.
SBUX isn’t only using technology to streamline orders — Starbucks is using tech to get people in the store in the first place. Last year, SBUX announced it would be installing more than 100,000 wireless phone charging stations in 7,500 locations, helping entice more foot traffic and keep customers hanging around longer.
Starbucks International Expansion
Finally, Starbucks’ international expansion efforts will be important to watch this quarter, and for the full fiscal year. The maturity of Starbucks in the U.S. means the company can’t squeeze meteoric growth out of domestic expansion.
Starbucks spent $900 million to beef up its presence in Japan last year, opened its first store in Brunei in 2014, and opened the first of what will be a 50-store expansion in Colombia. In 2012 and 2013, Starbucks opened stores in Costa Rica, Finland, India, Norway, Vietnam and Monaco.
What countries will SBUX push into this year and what will growth look like overseas this quarter?
Investors will be paying close attention to the execution on the “high-value opportunities in China, India, Japan and Brazil” that Starbucks believes will help send revenues from $16 billion in 2014 to $30 billion in 2019.
As of this writing John Divine owns shares of GOOG stock and GOOGL stock. You can follow him on Twitter at @divinebizkid.