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Starbucks (SBUX) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Starbucks (SBUX) closed the most recent trading day at $92.58, moving +1.14% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.84%. Elsewhere, the Dow gained 0.92%, while the tech-heavy Nasdaq added 1.06%.

Prior to today's trading, shares of the coffee chain had gained 4.03% over the past month. This has outpaced the Retail-Wholesale sector's gain of 3.8% and the S&P 500's gain of 3.95% in that time.

Investors will be hoping for strength from SBUX as it approaches its next earnings release, which is expected to be January 28, 2020. On that day, SBUX is projected to report earnings of $0.75 per share, which would represent no growth from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $7.08 billion, up 6.82% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.05 per share and revenue of $28.38 billion. These totals would mark changes of +7.77% and +7.07%, respectively, from last year.

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.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. SBUX currently has a Zacks Rank of #4 (Sell).

In terms of valuation, SBUX is currently trading at a Forward P/E ratio of 30.04. This represents a premium compared to its industry's average Forward P/E of 22.27.

Investors should also note that SBUX has a PEG ratio of 2.31 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 industry currently had an average PEG ratio of 2 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 91, putting it in the top 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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