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

Zacks Equity Research
·3 mins read

Starbucks (SBUX) closed the most recent trading day at $87.01, moving -1.65% from the previous trading session. This move lagged the S&P 500's daily loss of 1.4%. Meanwhile, the Dow lost 1.34%, and the Nasdaq, a tech-heavy index, lost 1.57%.

Prior to today's trading, shares of the coffee chain had gained 2.55% over the past month. This has outpaced the Retail-Wholesale sector's gain of 0.67% and the S&P 500's loss of 0.46% in that time.

SBUX will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.32, down 54.29% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $6.05 billion, down 10.31% from the year-ago period.

Investors should also note any recent changes to analyst estimates for SBUX. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.65% higher. SBUX is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, SBUX is currently trading at a Forward P/E ratio of 33.04. This valuation marks a premium compared to its industry's average Forward P/E of 31.68.

Also, we should mention that SBUX has a PEG ratio of 2.31. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Retail - Restaurants stocks are, on average, holding a PEG ratio of 4.11 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 44, putting it in the top 18% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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