Shares of Starbucks Corporation (SBUX Quick QuoteSBUX - Free Report) are showing early signs of a turnaround, driven by a recovery in customer traffic. The company returned to transaction growth in the United States in the first quarter of fiscal 2026 — the first increase in eight quarters — signaling a meaningful inflection in its demand trajectory.

The stock has demonstrated relative resilience, gaining 20.6% over the past year compared with the Zacks Retail – Restaurants industry’s 0.8% rise. This outperformance reflects improving investor confidence as Starbucks continues to execute on its turnaround strategy and deliver progress across key operating metrics.

SBUX Stock One-Year Price Performance

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With strengthening demand trends, improved store-level execution and steady international momentum, the focus now shifts to whether Starbucks can build on this momentum and deliver further upside. Let's analyze.

Traffic Recovery Signals Turnaround Momentum for SBUX

A key driver behind Starbucks’ improving narrative is the recovery in customer traffic, which had remained under pressure in prior quarters. In the first quarter of fiscal 2026, the company returned to transaction growth in the United States, with both rewards and non-rewards customers contributing to the improvement. This broad-based recovery suggests that demand is returning across customer cohorts — a critical foundation for sustained growth.

The Starbucks Rewards ecosystem continues to support engagement, with 90-day active members reaching a record 35.5 million. At the same time, growth in non-rewards customers indicates that Starbucks is regaining traction beyond its core loyalty base.

Against this backdrop, Starbucks’ improving traffic trends stand out relative to peers such as Dutch Bros Inc. (BROS Quick QuoteBROS - Free Report) , McDonald's Corporation (MCD Quick QuoteMCD - Free Report) and First Watch Restaurant Group, Inc. (FWRG Quick QuoteFWRG - Free Report) , where traffic growth remains closely tied to value positioning, menu innovation or daypart-specific demand drivers.

SBUX’s Operational Execution Gains Traction

Starbucks’ focus on improving store execution is delivering tangible results. The Green Apron Service model has enhanced throughput and service consistency, with average cafe and drive-thru service times running below the company’s four-minute target even amid higher traffic levels.

Pilot stores implementing the updated operating model are outperforming the broader system by approximately 200 basis points in comparable sales, driven primarily by transaction growth.

These improvements highlight Starbucks’ ability to scale execution enhancements across its network, strengthening the customer experience and supporting sustained demand recovery.

SBUX’s Innovation Pipeline Supports Incremental Demand

Starbucks is advancing its product strategy to align with evolving consumer preferences. The company has streamlined its menu by approximately 25%-30%, improving operational efficiency and enabling more focused execution in stores.

At the same time, Starbucks is building new product platforms, including protein beverages and customized energy offerings. Management indicated that these platforms are generating strong customer response and repeat engagement, supporting incremental demand and expanding customer occasions.

Adding to its innovation ecosystem, Starbucks recently introduced a beta Starbucks app within ChatGPT, enabling users to discover personalized drink recommendations through conversational AI. This initiative allows customers to explore menu options more intuitively and receive tailored suggestions, enhancing digital engagement and strengthening the brand’s connection with tech-savvy consumers.

The integration reflects Starbucks’ broader push toward digital personalization and seamless customer experiences, complementing its loyalty program and reinforcing its ability to drive incremental traffic through innovation-led engagement.

International Strength Aids SBUX’s Growth Visibility

Beyond North America, Starbucks continues to benefit from solid international performance, which remains a key contributor to its growth profile.

Comparable sales growth across international markets has been supported by strong transaction trends, particularly in China, the U.K. and Japan. China, in particular, has shown encouraging momentum, with comparable sales increasing 7% year over year in the fiscal first quarter.

The company’s planned partnership structure in China is expected to support long-term expansion while improving capital efficiency. At the same time, Starbucks continues to scale its global footprint, targeting 600-650 net new stores in fiscal 2026.

This expansion reinforces Starbucks’ long-term growth runway, particularly when compared with more domestically focused concepts like First Watch Restaurant, which remains more concentrated in the U.S. market.

Fiscal 2026 Outlook Instills Confidence in Starbucks

Starbucks has provided a constructive outlook for fiscal 2026, signaling steady growth and a gradual improvement in profitability as its turnaround strategy gains traction.

The company expects global and U.S. comparable store sales to increase at least 3%, with overall net revenues projected to grow at a similar pace. This outlook reflects continued momentum in transaction growth and improving customer engagement across markets.

On the profitability front, Starbucks anticipates a modest year-over-year expansion in non-GAAP operating margin, supported by strengthening sales leverage and ongoing operational efficiencies.

Earnings expectations further reinforce this improving trajectory. Starbucks projects non-GAAP earnings per share (EPS) in the range of $2.15-$2.40. Over the past 60 days, the Zacks Consensus Estimate for SBUX’s fiscal 2026 EPS has remained unchanged at $2.31.

SBUX Earnings Estimate Trend

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SBUX Stock Valuation & Technical Insights

Starbucks stock is currently trading at a premium. SBUX is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 37.18, well above the industry average of 23.92. Other industry players, such as Dutch Bros, McDonald's and First Watch Restaurant, have P/E ratios of 53.29, 22.56 and 45.91, respectively.

SBUX’s P/E Ratio (Forward 12-Month) vs. Industry

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From a technical perspective, SBUX is currently trading above its 50-day moving average, indicating solid upward momentum and price stability.

SBUX Stock Trades Above 50-Day Moving Average

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Our Thoughts on SBUX Stock

Starbucks is entering a more constructive phase of its turnaround, with transaction growth, improved execution and steady international performance supporting a strengthening fundamental outlook.

The combination of demand recovery, operational discipline and expanding digital capabilities —including initiatives like the ChatGPT integration — positions the company to deepen customer engagement and sustain momentum.

With a Zacks Rank #2 (Buy), Starbucks appears well-positioned for further upside as its turnaround continues to unfold. For investors seeking exposure to a globally scaled consumer brand showing early signs of recovery, the stock presents a compelling opportunity to consider at current levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.