We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Starbucks Stock a Buy as Growth Rebounds but Valuation Stays High?
Read MoreHide Full Article
Key Takeaways
Starbucks posted 7.9% global comparable sales growth, led by higher transactions and average ticket.
SBUX trades above its five-year median valuation, raising the bar for turnaround execution.
Starbucks grew Channel Development revenue 21.5%, adding a high-margin earnings stream amid recovery.
Starbucks Corporation (SBUX - Free Report) is showing clearer signs of an operating recovery. Traffic improved, earnings rebounded and management raised its fiscal 2026 outlook after the third quarter.
The investment question is whether that momentum offsets a demanding valuation and the continuing cost of the turnaround. The recovery is becoming broader, but the current price leaves less room for execution setbacks.
Starbucks Growth Is Improving
Third-quarter global comparable sales increased 7.9%, driven by a 4.2% rise in transactions and 3.5% ticket growth. North America comparable sales climbed 8.1%, including a 4.5% transaction gain and 3.5% increase in average ticket.
The improvement extended across dayparts, income groups and access points. Delivery remained a ticket driver, while food attachment reached a third-quarter record. That mix suggests the rebound is not being sustained by pricing alone.
SBUX Trades at a Premium
SBUX trades at 34.8X forward 12-month earnings, above the Zacks sub-industry’s 22.9X and its own five-year median of 27.8X. The premium raises the execution bar because part of the expected earnings recovery may already be reflected in the share price.
Restaurant investors have alternatives with different operating profiles. McDonald’s Corporation (MCD - Free Report) runs a heavily franchised global system, while Dutch Bros Inc. (BROS - Free Report) is a drive-thru beverage operator and franchisor. Those comparisons reinforce the need to judge Starbucks’ valuation against both mature restaurant models and faster-growing coffee concepts.
Starbucks Has More Earnings Levers
Starbucks is benefiting from higher food attachment, delivery demand, beverage modifications and loyalty engagement. U.S. 90-day active Rewards membership reached 35.8 million, while repeat orders following Free Mod Mondays indicate that customization can support frequency and ticket growth.
Channel Development adds a separate high-margin earnings stream. Third-quarter revenues increased 21.5% to $587.9 million, operating income rose 40.2% to $306.2 million and operating margin reached 52.1%. That business can help diversify profit growth when store-level costs remain elevated.
SBUX Faces Execution Risk
Margin recovery still depends on sustained sales leverage and cost discipline. Labor investments, unfavorable product mix and restructuring costs continued to offset some of the benefits from stronger sales, lower inflation and tariff refunds.
Restructuring and impairment expenses increased to $302.6 million from $20.8 million a year earlier. Starbucks is also modernizing inventory ordering, staffing, scheduling and point-of-sale systems. These initiatives may improve productivity, but they add implementation costs and operational risk during the turnaround.
Starbucks Signals Favor Patience
The improving demand trend and raised guidance support a more constructive view of Starbucks’ earnings path. Management now expects fiscal 2026 adjusted earnings of $2.55-$2.65 per share, up from the prior range of $2.25-$2.45.
The stock currently carries a Zacks Rank #3 (Hold). It also has a Growth Score of A, Momentum Score of A, VGM Score of B and Value Score of D. The favorable growth and momentum readings recognize improving operating and estimate trends, while the weaker value reading reflects a less attractive entry point. Together, these signals support a measured hold-or-wait stance rather than an aggressive purchase at the current valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Is Starbucks Stock a Buy as Growth Rebounds but Valuation Stays High?
Key Takeaways
Starbucks Corporation (SBUX - Free Report) is showing clearer signs of an operating recovery. Traffic improved, earnings rebounded and management raised its fiscal 2026 outlook after the third quarter.
The investment question is whether that momentum offsets a demanding valuation and the continuing cost of the turnaround. The recovery is becoming broader, but the current price leaves less room for execution setbacks.
Starbucks Growth Is Improving
Third-quarter global comparable sales increased 7.9%, driven by a 4.2% rise in transactions and 3.5% ticket growth. North America comparable sales climbed 8.1%, including a 4.5% transaction gain and 3.5% increase in average ticket.
Starbucks Corporation Price and Consensus
Starbucks Corporation price-consensus-chart | Starbucks Corporation Quote
The improvement extended across dayparts, income groups and access points. Delivery remained a ticket driver, while food attachment reached a third-quarter record. That mix suggests the rebound is not being sustained by pricing alone.
SBUX Trades at a Premium
SBUX trades at 34.8X forward 12-month earnings, above the Zacks sub-industry’s 22.9X and its own five-year median of 27.8X. The premium raises the execution bar because part of the expected earnings recovery may already be reflected in the share price.
Restaurant investors have alternatives with different operating profiles. McDonald’s Corporation (MCD - Free Report) runs a heavily franchised global system, while Dutch Bros Inc. (BROS - Free Report) is a drive-thru beverage operator and franchisor. Those comparisons reinforce the need to judge Starbucks’ valuation against both mature restaurant models and faster-growing coffee concepts.
Starbucks Has More Earnings Levers
Starbucks is benefiting from higher food attachment, delivery demand, beverage modifications and loyalty engagement. U.S. 90-day active Rewards membership reached 35.8 million, while repeat orders following Free Mod Mondays indicate that customization can support frequency and ticket growth.
Channel Development adds a separate high-margin earnings stream. Third-quarter revenues increased 21.5% to $587.9 million, operating income rose 40.2% to $306.2 million and operating margin reached 52.1%. That business can help diversify profit growth when store-level costs remain elevated.
SBUX Faces Execution Risk
Margin recovery still depends on sustained sales leverage and cost discipline. Labor investments, unfavorable product mix and restructuring costs continued to offset some of the benefits from stronger sales, lower inflation and tariff refunds.
Restructuring and impairment expenses increased to $302.6 million from $20.8 million a year earlier. Starbucks is also modernizing inventory ordering, staffing, scheduling and point-of-sale systems. These initiatives may improve productivity, but they add implementation costs and operational risk during the turnaround.
Starbucks Signals Favor Patience
The improving demand trend and raised guidance support a more constructive view of Starbucks’ earnings path. Management now expects fiscal 2026 adjusted earnings of $2.55-$2.65 per share, up from the prior range of $2.25-$2.45.
The stock currently carries a Zacks Rank #3 (Hold). It also has a Growth Score of A, Momentum Score of A, VGM Score of B and Value Score of D. The favorable growth and momentum readings recognize improving operating and estimate trends, while the weaker value reading reflects a less attractive entry point. Together, these signals support a measured hold-or-wait stance rather than an aggressive purchase at the current valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.