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Starbucks (SBUX) Gains As Market Dips: What You Should Know

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In the latest trading session, Starbucks (SBUX) closed at $83.59, marking a +0.06% move from the previous day. This change outpaced the S&P 500's 0.93% loss on the day. At the same time, the Dow lost 0.43%, and the tech-heavy Nasdaq lost 0.14%.

Prior to today's trading, shares of the coffee chain had gained 11.09% over the past month. This has outpaced the Retail-Wholesale sector's gain of 9.23% and the S&P 500's gain of 6.31% in that time.

Starbucks will be looking to display strength as it nears its next earnings release, which is expected to be August 2, 2022. On that day, Starbucks is projected to report earnings of $0.77 per share, which would represent a year-over-year decline of 23.76%. Our most recent consensus estimate is calling for quarterly revenue of $8.21 billion, up 9.5% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.87 per share and revenue of $32.34 billion, which would represent changes of -11.42% and +11.27%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Starbucks. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate has moved 1.04% lower. Starbucks currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, Starbucks is holding a Forward P/E ratio of 29.14. Its industry sports an average Forward P/E of 18, so we one might conclude that Starbucks is trading at a premium comparatively.

Investors should also note that SBUX has a PEG ratio of 2.59 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Restaurants was holding an average PEG ratio of 1.9 at yesterday's closing price.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 213, which puts it in the bottom 16% 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.

To follow SBUX in the coming trading sessions, be sure to utilize Zacks.com.


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