Starbucks (SBUX) Stock Slides as Market Rises: Facts to Know Before You Trade

Starbucks (SBUX) closed at $106.17 in the latest trading session, marking a -1.09% move from the prior day. The stock’s change was less than the S&P 500’s daily gain of 0.38%. Meanwhile, the Dow experienced a rise of 0.02%, and the technology-dominated Nasdaq saw an increase of 0.9%.

The coffee chain’s stock has climbed by 5.66% in the past month, exceeding the Retail-Wholesale sector’s gain of 0.77% and the S&P 500’s gain of 1.27%.

Analysts and investors alike will be keeping a close eye on the performance of Starbucks in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $0.65, marking a 30% rise compared to the same quarter of the previous year. In the meantime, our current consensus estimate forecasts the revenue to be $9.44 billion, indicating a 0.19% decline compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $2.4 per share and revenue of $38.27 billion, which would represent changes of +12.68% and +2.91%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Starbucks. Recent revisions tend to reflect the latest near-term business trends. As a result, upbeat changes in estimates indicate analysts’ favorable outlook on the business health and profitability.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To capitalize on this, we’ve crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical 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 last 30 days, the Zacks Consensus EPS estimate has moved 0.04% lower. Right now, Starbucks possesses a Zacks Rank of #3 (Hold).

In terms of valuation, Starbucks is presently being traded at a Forward P/E ratio of 44.76. This denotes a premium relative to the industry average Forward P/E of 20.71.

We can also see that SBUX currently has a PEG ratio of 2.14. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company’s expected earnings growth trajectory. By the end of yesterday’s trading, the Retail – Restaurants industry had an average PEG ratio of 1.97.

The Retail – Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 190, putting it in the bottom 23% of all 250+ industries.