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

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Starbucks (SBUX - Free Report) closed at $103.87 in the latest trading session, marking a -0.16% move from the prior day. This move lagged the S&P 500's daily gain of 0.28%. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq added 0.14%.

Coming into today, shares of the coffee chain had lost 9.3% in the past month. In that same time, the Retail-Wholesale sector lost 3.84%, while the S&P 500 gained 0.12%.

Starbucks will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.80, up 31.15% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $7.98 billion, up 18.28% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.45 per share and revenue of $32.68 billion, which would represent changes of +6.48% and +12.45%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Starbucks. These revisions typically reflect the latest short-term business trends, which can change frequently. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.06% higher. Starbucks currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, Starbucks is holding a Forward P/E ratio of 30.18. For comparison, its industry has an average Forward P/E of 20.94, which means Starbucks is trading at a premium to the group.

It is also worth noting that SBUX currently has a PEG ratio of 1.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 1.91 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 228, which puts it in the bottom 11% 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.

To follow SBUX in the coming trading sessions, be sure to utilize Zacks.com.


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