Starbucks Earnings: Sales Disappoint, but Margin and Store Growth Encouraging Amid Mixed Quarter

While wide-moat Starbucks' first-fiscal-quarter results fell short of our own forecasts and FactSet consensus estimates, we view progress toward its cost savings initiatives as an effective offset, resulting in no anticipated change to our $105 fair value estimate. Shares jumped 4% in aftermarket trading after results were better than the market had expected. We continue to view the coffee chain as a winner amid a difficult 2024 backdrop in the industry, with the firm boasting strong store economics, a loyalty program that accounts for 59% of North American sales, and the financial wherewithal to invest through the cycle in a manner that smaller peers cannot. Shares look slightly cheap.