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

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Starbucks (SBUX) closed at $78.20 in the latest trading session, marking a +0.36% move from the prior day. This move outpaced the S&P 500's daily loss of 0.3%. Meanwhile, the Dow lost 0.46%, and the Nasdaq, a tech-heavy index, lost 0.34%.

Prior to today's trading, shares of the coffee chain had gained 5.03% over the past month. This has outpaced the Retail-Wholesale sector's gain of 4.44% and the S&P 500's gain of 1.51% in that time.

Investors will be hoping for strength from Starbucks as it approaches its next earnings release. In that report, analysts expect Starbucks to post earnings of $0.78 per share. This would mark a year-over-year decline of 22.77%. Our most recent consensus estimate is calling for quarterly revenue of $8.21 billion, up 9.53% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.88 per share and revenue of $32.37 billion, which would represent changes of -11.11% and +11.37%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Starbucks. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.59% lower. Starbucks is holding a Zacks Rank of #4 (Sell) right now.

Looking at its valuation, Starbucks is holding a Forward P/E ratio of 27.06. Its industry sports an average Forward P/E of 19.11, so we one might conclude that Starbucks is trading at a premium comparatively.

Meanwhile, SBUX's PEG ratio is currently 2.3. 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 industry currently had an average PEG ratio of 1.76 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 210, putting it in the bottom 17% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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