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Starbucks (SBUX) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Starbucks (SBUX - Free Report) closed at $111.33, marking a -0.59% move from the previous day. This change lagged the S&P 500's daily loss of 0.08%.

Coming into today, shares of the coffee chain had lost 2.06% in the past month. In that same time, the Retail-Wholesale sector lost 2.19%, while the S&P 500 gained 1.68%.

SBUX will be looking to display strength as it nears its next earnings release. In that report, analysts expect SBUX to post earnings of $0.76 per share. This would mark year-over-year growth of 265.22%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.23 billion, up 71.17% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.98 per share and revenue of $28.74 billion. These totals would mark changes of +154.7% and +22.2%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for SBUX. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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, 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. The Zacks Consensus EPS estimate has moved 0.06% lower within the past month. SBUX is currently a Zacks Rank #3 (Hold).

Looking at its valuation, SBUX is holding a Forward P/E ratio of 37.61. Its industry sports an average Forward P/E of 29.21, so we one might conclude that SBUX is trading at a premium comparatively.

It is also worth noting that SBUX currently has a PEG ratio of 3.13. 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. Retail - Restaurants stocks are, on average, holding a PEG ratio of 2.93 based on yesterday's closing prices.

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 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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