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Starbucks (SBUX) Gains But Lags Market: What You Should Know

Zacks Equity Research

Starbucks (SBUX) closed at $84.67 in the latest trading session, marking a +0.42% move from the prior day. The stock lagged the S&P 500's daily gain of 0.8%. Elsewhere, the Dow gained 0.47%, while the tech-heavy Nasdaq added 1.12%.

Prior to today's trading, shares of the coffee chain had lost 12.27% over the past month. This has lagged the Retail-Wholesale sector's loss of 2.54% and the S&P 500's loss of 1.07% in that time.

Wall Street will be looking for positivity from SBUX as it approaches its next earnings report date. In that report, analysts expect SBUX to post earnings of $0.70 per share. This would mark year-over-year growth of 12.9%. Meanwhile, our latest consensus estimate is calling for revenue of $6.63 billion, up 5.24% from the prior-year quarter.

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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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 1.08% lower. SBUX currently has a Zacks Rank of #4 (Sell).

Digging into valuation, SBUX currently has a Forward P/E ratio of 27.18. For comparison, its industry has an average Forward P/E of 22.48, which means SBUX is trading at a premium to the group.

It is also worth noting that SBUX currently has a PEG ratio of 2.05. 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 was holding an average PEG ratio of 2.05 at yesterday's closing price.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 164, putting it in the bottom 36% 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.

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


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