Starbucks (SBUX) stock opened notably lower Wednesday after the coffee retailer announced preliminary financial results for its fourth quarter, which failed to impress Wall Street. However, shares have pared the bulk of these losses at last check after the company announced another dividend hike.
For its fiscal 2024 fourth quarter, Starbucks said net revenues declined 3% to $9.1 billion as global comparable-store sales fell 7%. Meanwhile, its earnings per share (EPS) were down 24% from the year-ago period to 80 cents.
The preliminary results fall well short of the $9.4 billion in revenue and $1.03 per share in earnings analysts expected, according to CNBC.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top line and bottom line," said Starbucks Chief Financial Officer Rachel Ruggeri in a statement. "We are developing a plan to turn around our business, but it will take time."
Starbucks also said that guidance will be suspended for the full fiscal year 2025 as a result of its recent CEO transition and "the current state of the business," adding that it "will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth."
Starbucks its hikes dividend again
"We want to amplify our confidence in the business, and provide some certainty as we drive our turnaround,” Ruggeri said. "For that reason, we have increased our dividend."
Indeed, Starbucks hiked its quarterly dividend by 7% to 61 cents per share, or $2.44 per share per share on an annual basis. The next dividend is payable on November 29 to shareholders of record on November 15.
Starbucks proudly noted that this marked the 14th consecutive annual dividend increase, which is notable for investors.
"Shares in companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with," writes Dan Burrows, senior investing writer at Kiplinger, in his feature "Best Dividend Stocks to Buy for Dependable Dividend Growth."
Additionally, companies that manage to raise their dividends year after year demonstrate "financial resilience" and a "commitment to returning cash to shareholders," he adds.
Is Starbucks stock a buy, sell or hold?
It hasn't been the best year on the price charts for the blue chip stock, which is up just about 3% on a total return basis (price change plus dividends). This vastly lags the S&P 500's 24% total return. But Wall Street remains bullish.
According to S&P Global Market Intelligence, the average analyst target price for SBUX stock is $99.97, representing implied upside of nearly 4% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Stifel is one of those with a Buy rating on the consumer discretionary stock, along with a $105 price target.
"We are Buy-rated on Starbucks because we believe the company will show improvement in transaction trends in the U.S. under Brian Niccol's new leadership," says Stifel analyst Chris O'Cull. "Based on Mr. Niccol's track record at Chipotle and Taco Bell, we believe the company will formulate a coherent strategy and deliver better execution to improve the U.S. segment's top-line performance."
Related Content
-
7 Best Places in the US for Wellness Tourism — Beyond CaliforniaCalifornia doesn't have a monopoly on wellness tourism. These U.S. retreats offer exercise, relaxation and good food in stunning scenery that might be closer to home.
-
How to Apply for Social Security Retirement BenefitsThere are two ways to apply for Social Security retirement benefits.
-
To Future-Proof Retirement Security, We Need Better StrategiesWith retirees living longer and the inequalities that affect women and people of color, the retirement system needs some optimization. Here’s what would help.
-
Here's Why We All Win When Charitable Dollars Go to WomenGiving to charities for women and girls not only has a lasting impact on their lives — it also benefits society as a whole. Here’s how to start investing.
-
Stock Market Today: Stocks Close Mixed Amid War Angst, Nvidia AnxietyMarkets went into risk-off mode amid rising geopolitical tensions and high anxiety ahead of bellwether Nvidia's earnings report.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
Target Is the Worst S&P 500 Stock After Earnings. Here's WhyTarget stock is down big after the retailer missed expectations for its third quarter and slashed its full-year outlook. Here's what Wall Street is saying.
-
For a More Secure Retirement, Build in Some 'Safe Money'To solidify your retirement plan, write it down, reduce your market risk and allocate more safe money into your plan for income.
-
Five Steps to a Mindfully Fearless CareerIf, like many women, you're struggling with imposter syndrome, try developing an athlete's winning mindset. It's as simple as facing one small fear every day.
