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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 - Free Report) closed at $119.34, marking a +0.46% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.77%.

Heading into today, shares of the coffee chain had gained 2.63% over the past month, outpacing the Retail-Wholesale sector's gain of 0.63% and the S&P 500's gain of 1.55% in that time.

SBUX will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.01, up 98.04% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.3 billion, up 33.79% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.25 per share and revenue of $29.21 billion. These totals would mark changes of +177.78% and +24.19%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for SBUX. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 0.08% higher. SBUX is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, SBUX is holding a Forward P/E ratio of 36.55. Its industry sports an average Forward P/E of 25.36, so we one might conclude that SBUX is trading at a premium comparatively.

We can also see that SBUX currently has a PEG ratio of 3.05. 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 2.77 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 120, putting it in the top 48% 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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