Investors are hoping for the return of a more confident Starbucks (SBUX) when the company reports its fiscal second quarter earnings on Tuesday after the bell.
In the first quarter, Starbucks posted its first same-store sales growth in North America and the US in two years. Analysts are hoping the momentum continued in the second quarter with turnaround efforts led by CEO Brian Niccol.
Wall Street forecast same-store sales growth of 3.7%, led by US and North America sales, according to Bloomberg consensus data. Last year, the company saw a 1% decline in overall same-store sales growth in the second quarter.
Revenue is expected to grow about 4% year over year to $9.14 billion, alongside a nearly 5% increase in adjusted earnings per share, which analysts expect to come in at $0.43, compared to $0.41 last year.
Deutsche Bank analyst Lauren Silberman said she believes same-store sales growth may have risen as much as 6%, “reflecting benefits from the flywheel effect of better operations (supported by labor investments), strong cadence of relevant innovation and more effective marketing.”
During the quarter, Starbucks announced it would expand tipping options and pay $1,200 annual bonuses to baristas and managers beginning in July, with the first payout this fall.
Higher foot traffic is also seen as a catalyst. “If traffic accelerates from 3% in the first quarter to near mid-single digits in second quarter it will be hard to ignore that sequential improvement as evidence that the turnaround is taking hold,” BTIG analyst Peter Saleh wrote in a note to clients.
Starbucks stock has risen 16% year to date, outperforming the 5% gain for the S&P 500 (^GSPC).
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.