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
-
Here's How To Get Organized And Work For YourselfWhether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
How to Manage Risk With Diversification"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
-
What You Need to Know About Working For Yourself
Whether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
How to Manage Portfolio Risk With Diversification
"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
-
How Much Money Is Enough to Be Happy? Can You Have Too Much?The relationship between money and happiness is complicated, but the experts agree on these three eye-opening fundamentals.
-
Stock Market Today: Muted Inflation Data Sparks Relief RallyEncouraging news about the path of consumer prices sent risk assets soaring again.
-
What Can Accredited Investors Do?As an accredited investor, you will have access to a more diverse pool of investment options. Here's what you need to know.
-
Five Year-End Strategies You Can't Afford to MissInstead of making New Year's resolutions, consider making some money moves that could help save you big bucks on your taxes.
-
Buying an Insurance Policy: Three Ways to Do ItYou can buy an insurance policy through an insurance agent or broker or on the internet. Which way works best for you?
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing StreakEquity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
