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

Zacks Equity Research

Starbucks (SBUX) closed at $90.16 in the latest trading session, marking a -0.41% move from the prior day. This change lagged the S&P 500's 0.29% loss on the day. Elsewhere, the Dow lost 0.46%, while the tech-heavy Nasdaq lost 0.27%.

Coming into today, shares of the coffee chain had gained 2.63% in the past month. In that same time, the Retail-Wholesale sector gained 5.03%, while the S&P 500 gained 4.56%.

Investors will be hoping for strength from SBUX as it approaches its next earnings release. In that report, analysts expect SBUX to post earnings of $0.75 per share. This would mark no growth from the year-ago period. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.08 billion, up 6.82% from the year-ago period.

SBUX's full-year Zacks Consensus Estimates are calling for earnings of $3.05 per share and revenue of $28.38 billion. These results would represent year-over-year changes of +7.77% and +7.07%, respectively.

Any recent changes to analyst estimates for SBUX should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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.

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. Within the past 30 days, our consensus EPS projection remained stagnant. SBUX currently has a Zacks Rank of #4 (Sell).

Investors should also note SBUX's current valuation metrics, including its Forward P/E ratio of 29.71. For comparison, its industry has an average Forward P/E of 21.86, which means SBUX is trading at a premium to the group.

Investors should also note that SBUX has a PEG ratio of 2.29 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 2.09 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 81, which puts it in the top 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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