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Starbucks (SBUX) Registers a Bigger Fall Than the Market: Important Facts to Note

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Starbucks (SBUX - Free Report) closed at $91.61 in the latest trading session, marking a -0.85% move from the prior day. The stock trailed the S&P 500, which registered a daily loss of 0.19%. On the other hand, the Dow registered a gain of 0.1%, and the technology-centric Nasdaq decreased by 0.54%.

The coffee chain's stock has dropped by 1.57% in the past month, falling short of the Retail-Wholesale sector's gain of 2.94% and the S&P 500's gain of 3.18%.

The upcoming earnings release of Starbucks will be of great interest to investors. The company's earnings per share (EPS) are projected to be $0.83, reflecting a 12.16% increase from the same quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $9.22 billion, indicating a 5.76% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates project earnings of $4.06 per share and a revenue of $38.82 billion, demonstrating changes of +14.69% and +7.9%, respectively, from the preceding year.

It is also important to note the recent changes to analyst estimates for Starbucks. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.08% lower. Starbucks presently features a Zacks Rank of #3 (Hold).

In terms of valuation, Starbucks is currently trading at a Forward P/E ratio of 22.73. This expresses a premium compared to the average Forward P/E of 19.65 of its industry.

It is also worth noting that SBUX currently has a PEG ratio of 1.46. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Retail - Restaurants industry had an average PEG ratio of 1.99 as trading concluded yesterday.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 158, putting it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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