A month has gone by since the last earnings report for Starbucks (SBUX Quick QuoteSBUX - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Starbucks due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

Starbucks Q2 Earnings Beat Estimates, Revenues Rise Y/Y

Starbucks reported solid second-quarter fiscal 2026 results, with adjusted earnings and net revenues beating the Zacks Consensus Estimate and increasing on a year-over-year basis. 

The company reported adjusted earnings per share of 50 cents, beating the Zacks Consensus Estimate of 44 cents by 13.64%. Adjusted earnings increased 22.0% from 41 cents in the prior-year quarter.

Net revenues of $9.53 billion topped the consensus mark of $9.17 billion by 3.92%. The top line increased 8.8% year over year. Global comparable store sales rose 6.2%, primarily driven by a 3.8% increase in comparable transactions and a 2.3% increase in average ticket.

SBUX’s Profitability Improves as Operating Margin Expands

Starbucks delivered margin progress in the quarter, supported by stronger sales leverage and lower depreciation and amortization costs tied to classifying Starbucks retail operations in China as held for sale. GAAP operating margin expanded 180 basis points year over year to 8.7%, reflecting improved operating income performance versus the prior-year period.

On a non-GAAP basis, operating margin expanded 120 basis points year over year to 9.4%. Starbucks also benefited from a sharp decline in restructuring and impairment charges versus a year ago, partially offsetting ongoing cost pressures that flowed through product, distribution and labor-related lines.

Starbucks North America Gains on Higher Traffic and Ticket

North America remained the largest revenue driver in the fiscal second quarter, with segment net revenues rising 6.5% year over year to $6.89 billion. The increase was primarily supported by higher company-operated store revenues, as comparable store sales rose 7.1% year over year on a 4.4% increase in comparable transactions and a 2.6% rise in average ticket.

Profitability in the region was pressured by investments and input costs. North America’s operating income declined to $679.9 million from $748.3 million a year ago, with operating margin contracting 170 basis points year over year to 9.9%. The company attributed the profitability headwinds primarily to labor investments tied to “Back to Starbucks,” product mix shifts and inflation led by tariffs and elevated coffee pricing, partially offset by sales leverage.

SBUX’s International Profit Rises on China Accounting Benefit

During the fiscal second quarter, the International segment posted strong top-line momentum, with net revenues increasing 9.9% year over year to $2.05 billion. The upside was aided by growth in the licensed store business and favorable currency translation. Comparable store sales increased 2.6% year over year, primarily driven by a 2.1% increase in comparable transactions and a 0.5% rise in average ticket.

In the fiscal second quarter, the segment’s operating income came in at $398.6 million (compared with $217 million in the prior-year quarter), lifting operating margin to 19.4% from 11.6% in the year-ago period. The improvement was primarily driven by lower store operating and depreciation and amortization costs after classifying China retail operations as held for sale and ceasing related depreciation and amortization, along with sales leverage. These benefits were partially offset by inflationary pressures, primarily from elevated coffee pricing.

Starbucks’ Channel Business Accelerates With Alliance Lift

Channel Development posted a standout top-line gain, with fiscal second-quarter net revenues increasing 38.8% year over year to $567.8 million. The uplift was attributed primarily to higher revenues from the Global Coffee Alliance, continuing a trend of stronger contributions within the segment.

In the fiscal second quarter, the segment’s operating income increased to $229.9 million compared with $193.5 million reported in the prior-year quarter. However, operating margin declined 680 basis points year over year to 40.5%, as lower income from the North American Coffee Partnership joint venture lagged segment revenue growth, compounded by other product mix shifts.

Starbucks’ Balance Sheet Reflects Returns and China Shift

Starbucks ended the quarter with cash and cash equivalents of $1.53 billion, down from $3.22 billion at the end of fiscal 2025, while assets held for sale totaled $5.04 billion, reflecting the China classification. Long-term debt stood at $13.08 billion compared with $14.58 billion at fiscal 2025 year-end, consistent with balance sheet management actions outlined by the company.

Cash generation remained meaningful in the first half, with net cash provided by operating activities of $1.96 billion for the two quarters ended March 29, 2026. Starbucks invested $596.4 million in additions to property, plant and equipment. It paid $1.41 billion in cash dividends and repaid $1 billion of long-term debt during the same period. The board declared a quarterly cash dividend of 62 cents per share payable May 29, 2026, to its shareholders of record as of May 15.

SBUX Lifts 2026 Outlook, Updates China Structure

Starbucks updated its fiscal 2026 outlook following the quarter’s results, reflecting improved comparable-sales momentum versus its earlier expectations. The company now calls for global and U.S. comparable store sales growth of 5% or greater, up from its prior view of at least 3%.

SBUX continues to anticipate year-over-year non-GAAP operating margin improvement while maintaining its plan to open roughly 600-650 net new coffeehouses globally.

The earnings framework also moved higher. Starbucks lifted its non-GAAP earnings per share outlook to $2.25-$2.45 from the prior $2.15-$2.40 range.

Starbucks highlighted the closing of its previously announced joint venture with Boyu Capital to operate Starbucks retail in China, with the impact expected to begin to be reflected in third-quarter results.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates review.

VGM Scores

Currently, Starbucks has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Starbucks has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.