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

Zacks Equity Research
·3 min read

Starbucks (SBUX) closed the most recent trading day at $102.85, moving -0.42% from the previous trading session. This change lagged the S&P 500's 0.39% loss on the day. Meanwhile, the Dow gained 0.12%, and the Nasdaq, a tech-heavy index, lost 0.1%.

Heading into today, shares of the coffee chain had gained 5.65% over the past month, outpacing the Retail-Wholesale sector's gain of 3.81% and the S&P 500's gain of 4.06% in that time.

SBUX will be looking to display strength as it nears its next earnings release. On that day, SBUX is projected to report earnings of $0.55 per share, which would represent a year-over-year decline of 30.38%. Our most recent consensus estimate is calling for quarterly revenue of $6.91 billion, down 2.7% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.81 per share and revenue of $28.40 billion. These totals would mark changes of +140.17% and +20.78%, respectively, from last year.

Any recent changes to analyst estimates for SBUX should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.04% lower within the past month. SBUX is currently a Zacks Rank #3 (Hold).

Digging into valuation, SBUX currently has a Forward P/E ratio of 36.81. For comparison, its industry has an average Forward P/E of 33.33, which means SBUX is trading at a premium to the group.

Investors should also note that SBUX has a PEG ratio of 2.68 right now. 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. The Retail - Restaurants industry currently had an average PEG ratio of 3.17 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 174, which puts it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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