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Starbucks (SBUX) Outpaces Stock Market Gains: What You Should Know

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Starbucks (SBUX - Free Report) closed the most recent trading day at $81.40, moving +1.8% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.61%. Elsewhere, the Dow gained 0.71%, while the tech-heavy Nasdaq added 0.53%.

Coming into today, shares of the coffee chain had gained 2.45% in the past month. In that same time, the Retail-Wholesale sector lost 8.25%, while the S&P 500 lost 3.77%.

Investors will be hoping for strength from SBUX as it approaches its next earnings release. In that report, analysts expect SBUX to post earnings of $0.73 per share. This would mark year-over-year growth of 17.74%. Meanwhile, our latest consensus estimate is calling for revenue of $6.68 billion, up 5.82% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.78 per share and revenue of $26.24 billion, which would represent changes of +14.88% and +6.16%, respectively, from the prior year.

Any recent changes to analyst estimates for SBUX should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0% lower. SBUX is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, SBUX currently has a Forward P/E ratio of 28.76. This represents a premium compared to its industry's average Forward P/E of 21.84.

Also, we should mention that SBUX has a PEG ratio of 2.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Restaurants was holding an average PEG ratio of 2.14 at yesterday's closing price.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 159, putting it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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