Starbucks Earnings: Strong Results Demonstrate Reinvention Plan Progress; Shares Fairly Valued

Starbucks shares jumped 10% after the wide-moat company posted strong fiscal fourth-quarter results, with $9.4 billion in global sales (up 11%) and $1.06 in EPS comfortably topping our $8.9 billion and $0.95 estimates. With comparable-store sales growth balanced between traffic (up 3%) and pricing (up 4%), driven in part by a swelling loyalty program (approaching 33 million members in the United States, up 14% annually), the firm appears to be firing on all cylinders despite a challenging backdrop. As we digest results, we expect to raise our $103 fair value estimate by a mid-single-digit percentage.