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Starbucks (SBUX) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 mins read

Starbucks (SBUX) closed at $84.80 in the latest trading session, marking a -1.48% move from the prior day. This move lagged the S&P 500's daily loss of 0.48%. Meanwhile, the Dow lost 0.48%, and the Nasdaq, a tech-heavy index, lost 0.29%.

Heading into today, shares of the coffee chain had gained 1.89% over the past month, outpacing the Retail-Wholesale sector's loss of 4.35% and the S&P 500's loss of 4.3% in that time.

Wall Street will be looking for positivity from SBUX as it approaches its next earnings report date. The company is expected to report EPS of $0.31, down 55.71% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.05 billion, down 10.32% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.98 per share and revenue of $23.36 billion, which would represent changes of -65.37% and -11.88%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for SBUX. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.48% higher. SBUX is currently a Zacks Rank #2 (Buy).

Investors should also note SBUX's current valuation metrics, including its Forward P/E ratio of 88.21. This represents a premium compared to its industry's average Forward P/E of 32.84.

Investors should also note that SBUX has a PEG ratio of 6.15 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Restaurants industry currently had an average PEG ratio of 4.58 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 60, putting it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report To read this article on Zacks.com click here.