Lennox International Inc
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Industrials : Building Products | Mid Cap Blend
Company profile

Lennox International Inc. is a provider of climate control solutions. The Company designs, manufactures and markets a range of products for the heating, ventilation, air conditioning and refrigeration (HVACR) markets. The Company operates through three segments: Residential Heating & Cooling, Commercial Heating & Cooling and Refrigeration. Residential Heating & Cooling segment manufactures and markets a range of furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies and related products. Commercial Heating & Cooling segment manufactures and sells unitary heating and cooling equipment used in light commercial applications, such as low-rise office buildings, restaurants, retail centers, churches and schools. Refrigeration segment manufactures and markets equipment for the global commercial refrigeration markets under the Heatcraft Worldwide Refrigeration name.

Closing Price
$222.67
Day's Change
0.16 (0.07%)
Bid
--
Ask
--
B/A Size
--
Day's High
226.74
Day's Low
220.09
Volume
(Below Average)
Volume:
369,434

10-day average volume:
423,298
369,434

Is Most-Watched Stock Starbucks Corporation (SBUX) Worth Betting on Now?

8:00 am ET July 22, 2022 (Zacks) Print

Starbucks (SBUX) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Shares of this coffee chain have returned +11.1% over the past month versus the Zacks S&P 500 composite's +6.3% change. The Zacks Retail - Restaurants industry, to which Starbucks belongs, has gained 9.2% over this period. Now the key question is: Where could the stock be headed in the near term?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current quarter, Starbucks is expected to post earnings of $0.77 per share, indicating a change of -23.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.1% over the last 30 days.

The consensus earnings estimate of $2.87 for the current fiscal year indicates a year-over-year change of -11.4%. This estimate has changed -1% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $3.43 indicates a change of +19.6% from what Starbucks is expected to report a year ago. Over the past month, the estimate has changed -1.3%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Starbucks is rated Zacks Rank #3 (Hold).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

12-month consensus EPS estimate for SBUX _12MonthEPSChartUrl

Projected Revenue Growth

While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For Starbucks, the consensus sales estimate for the current quarter of $8.21 billion indicates a year-over-year change of +9.5%. For the current and next fiscal years, $32.34 billion and $35.65 billion estimates indicate +11.3% and +10.3% changes, respectively.

Last Reported Results and Surprise History

Starbucks reported revenues of $7.64 billion in the last reported quarter, representing a year-over-year change of +14.5%. EPS of $0.59 for the same period compares with $0.62 a year ago.

Compared to the Zacks Consensus Estimate of $7.61 billion, the reported revenues represent a surprise of +0.39%. The EPS surprise was -1.67%.

Over the last four quarters, the company surpassed EPS estimates just once. The company topped consensus revenue estimates three times over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Starbucks is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Conclusion

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Starbucks. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.


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