Analyst Note
| Sean Dunlop |Wide-moat Starbucks reported strong fiscal 2021 third-quarter earnings, with a sharp year-over-year bump in guest traffic driving 84% comparable store sales growth in the Americas segment, or 9% relative to 2019's level, though visits remained 10% below prepandemic volumes. Notably, the segment's operating margin clocked in at 24.4%, the highest since the third quarter of 2017, as cost savings from store footprint rationalization and sales leverage more than offset supply chain pressure and wage increases. While the initial market reaction was negative (shares down about 3% in post-market trading), likely attributable to lowered guidance in the international unit, we anticipate raising our fair value estimate to $109 from $107 prior, on operational improvements, an impressive ability to defray inflationary pressure, and sustained strength in consumer-packaged goods.