DNKN - Will the Starbucks Rebound Continue in 2020?
Starbucks (NASDAQ: SBUX) operates the largest chain of coffee shops in the world with 31,000 locations, most of which are company-owned. The restaurant stock produced a stellar twelve months for shareholders in 2018, rising from $49 in July 2018 to $99 in July 2019. This momentum was unsustainable, and the stock dropped nearly 20% from its all-time high, but some strength in December has driven shares up to $87 -- poised to close the year up 35%.
Starbucks delivered 7% revenue growth in fiscal 2019, driven primarily by 5% comparable sales growth from existing locations. This performance was impressive because the company was able to approach prior levels of growth despite pulling back on new store openings. Starbucks experienced a 63 basis point reduction in operating margin from the prior year, primarily attributable to non-recurring expenses related to corporate restructuring and streamlining efforts. Analysts are expecting 8% revenue growth in 2020, with more than 10% earnings growth, which suggests that the market is anticipating sustained high repurchase activity or margin improvement. The chain is forecasting 3% to 4% comparable sales growth and 2,000 new store openings in 2020, and investors are bullish about the opportunity to expand in the Chinese market.
Image Source: Starbucks