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

Zacks Equity Research

Starbucks (SBUX) closed the most recent trading day at $90.25, moving +0.19% from the previous trading session. This change outpaced the S&P 500's 0.65% loss on the day. Elsewhere, the Dow lost 0.42%, while the tech-heavy Nasdaq lost 0.46%.

Heading into today, shares of the coffee chain had gained 8.63% over the past month, outpacing the Retail-Wholesale sector's gain of 5.76% and the S&P 500's gain of 4.11% in that time.

SBUX will be looking to display strength as it nears its next earnings release, which is expected to be July 25, 2019. In that report, analysts expect SBUX to post earnings of $0.73 per share. This would mark year-over-year growth of 17.74%. Our most recent consensus estimate is calling for quarterly revenue of $6.68 billion, up 5.93% from the year-ago period.

SBUX's full-year Zacks Consensus Estimates are calling for earnings of $2.78 per share and revenue of $26.26 billion. These results would represent year-over-year changes of +14.88% and +6.21%, respectively.

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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.07% higher. SBUX is currently a Zacks Rank #2 (Buy).

Digging into valuation, SBUX currently has a Forward P/E ratio of 32.37. For comparison, its industry has an average Forward P/E of 23.76, which means SBUX is trading at a premium to the group.

Investors should also note that SBUX has a PEG ratio of 2.52 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. SBUX's industry had an average PEG ratio of 2.12 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 83, putting it in the top 33% 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.

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

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