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Can SBUX Deliver 18% EPS Growth Despite a 1% Revenue Decline in FY27?
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Key Takeaways
Starbucks expects fiscal 2027 EPS of $3.15-$3.25, up 18% at the midpoint despite a 1% revenue decline.
China's deconsolidation weighs on revenues, while North America comparable sales are expected to rise 4% YoY.
Operating margin is projected at 13.5%-14%, while a 53rd week adds $700M in revenues and over 10 cents to EPS.
Starbucks Corporation (SBUX - Free Report) expects fiscal 2027 earnings per share (EPS) of $3.15-$3.25, representing growth of approximately 18% at the midpoint, despite an anticipated 1% decline in consolidated revenues. The differing trajectories primarily reflect the transition of Starbucks’ China retail operations to a licensed joint venture, alongside expected operating margin expansion as its Back to Starbucks strategy progresses.
The projected revenue decline primarily reflects China’s deconsolidation. In the first half of fiscal 2027, Starbucks’ reported revenues will exclude China retail sales that were included in the corresponding fiscal 2026 period. The company continues to recognize its share of the joint venture’s earnings, although the venture’s retail sales are no longer included in consolidated revenues. Meanwhile, North America company-operated comparable sales are expected to grow approximately 4% year over year, supported by beverage and food innovation, Green Apron Service and delivery. Fewer new North American openings and modest coffee deflation also factor into the revenue outlook.
Margin improvement provides the principal operating support for earnings growth. Starbucks expects consolidated operating margin of 13.5%-14% in fiscal 2027, an increase of approximately 190 basis points at the midpoint. Sales leverage, coffeehouse execution and cost savings are expected to contribute. Starbucks has realized roughly half of its targeted gross savings. With the initial Green Apron Service labor investments now included in both comparison periods, the company expects savings to contribute more visibly to fiscal 2027 margins. Consolidated general and administrative expenses are projected to remain flat to slightly lower in dollar terms year over year.
The fiscal calendar also contributes to the outlook. Fiscal 2027 includes a 53rd week, expected to add approximately $700 million in revenues and slightly more than 10 cents to EPS. Consequently, part of the projected earnings increase comes from the additional week. North America comparable-sales guidance, however, remains on a comparable 52-week basis, providing a clearer measure of underlying demand.
Starbucks’ path to earnings growth rests on converting comparable-sales gains and cost savings into stronger margins. If execution meets expectations, the company could deliver higher earnings despite lower consolidated revenues. The additional fiscal week supports the target.
SBUX’s Price Performance, Valuation & Estimates
Shares of Starbucks have gained 26.6% in the past year compared with the industry’s rise of 0.5%. In the same time frame, other industry players like Dutch Bros Inc. (BROS - Free Report) and McDonald's Corporation (MCD - Free Report) have declined 35.7% and 8.6%, respectively.
SBUX’s One-Year Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, SBUX trades at a forward price-to-sales (P/S) multiple of 3.24, below the industry’s average of 3.27. Conversely, industry players, such as Dutch Bros and McDonald's, have P/S multiples of 2.43 and 6.98, respectively.
SBUX’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SBUX’s fiscal 2027 earnings per share has increased in the past 30 days.
EPS Trend of SBUX Stock
Image Source: Zacks Investment Research
The company is likely to report strong earnings, with projections indicating a 18% rise in fiscal 2027. Conversely, industry players like McDonald's are likely to witness an increase of 5.5%, year over year, in 2027 earnings. Meanwhile, Dutch Bros’ 2027 earnings are likely to witness a rise of 31% year over year.
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Can SBUX Deliver 18% EPS Growth Despite a 1% Revenue Decline in FY27?
Key Takeaways
Starbucks Corporation (SBUX - Free Report) expects fiscal 2027 earnings per share (EPS) of $3.15-$3.25, representing growth of approximately 18% at the midpoint, despite an anticipated 1% decline in consolidated revenues. The differing trajectories primarily reflect the transition of Starbucks’ China retail operations to a licensed joint venture, alongside expected operating margin expansion as its Back to Starbucks strategy progresses.
The projected revenue decline primarily reflects China’s deconsolidation. In the first half of fiscal 2027, Starbucks’ reported revenues will exclude China retail sales that were included in the corresponding fiscal 2026 period. The company continues to recognize its share of the joint venture’s earnings, although the venture’s retail sales are no longer included in consolidated revenues. Meanwhile, North America company-operated comparable sales are expected to grow approximately 4% year over year, supported by beverage and food innovation, Green Apron Service and delivery. Fewer new North American openings and modest coffee deflation also factor into the revenue outlook.
Margin improvement provides the principal operating support for earnings growth. Starbucks expects consolidated operating margin of 13.5%-14% in fiscal 2027, an increase of approximately 190 basis points at the midpoint. Sales leverage, coffeehouse execution and cost savings are expected to contribute. Starbucks has realized roughly half of its targeted gross savings. With the initial Green Apron Service labor investments now included in both comparison periods, the company expects savings to contribute more visibly to fiscal 2027 margins. Consolidated general and administrative expenses are projected to remain flat to slightly lower in dollar terms year over year.
The fiscal calendar also contributes to the outlook. Fiscal 2027 includes a 53rd week, expected to add approximately $700 million in revenues and slightly more than 10 cents to EPS. Consequently, part of the projected earnings increase comes from the additional week. North America comparable-sales guidance, however, remains on a comparable 52-week basis, providing a clearer measure of underlying demand.
Starbucks’ path to earnings growth rests on converting comparable-sales gains and cost savings into stronger margins. If execution meets expectations, the company could deliver higher earnings despite lower consolidated revenues. The additional fiscal week supports the target.
SBUX’s Price Performance, Valuation & Estimates
Shares of Starbucks have gained 26.6% in the past year compared with the industry’s rise of 0.5%. In the same time frame, other industry players like Dutch Bros Inc. (BROS - Free Report) and McDonald's Corporation (MCD - Free Report) have declined 35.7% and 8.6%, respectively.
SBUX’s One-Year Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, SBUX trades at a forward price-to-sales (P/S) multiple of 3.24, below the industry’s average of 3.27. Conversely, industry players, such as Dutch Bros and McDonald's, have P/S multiples of 2.43 and 6.98, respectively.
SBUX’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SBUX’s fiscal 2027 earnings per share has increased in the past 30 days.
EPS Trend of SBUX Stock
Image Source: Zacks Investment Research
The company is likely to report strong earnings, with projections indicating a 18% rise in fiscal 2027. Conversely, industry players like McDonald's are likely to witness an increase of 5.5%, year over year, in 2027 earnings. Meanwhile, Dutch Bros’ 2027 earnings are likely to witness a rise of 31% year over year.
SBUX stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.