Starbucks (SBUX) Stock Drops Despite Market Gains: Important Facts to Note

Starbucks (SBUX) closed the most recent trading day at $102.19, moving -1.8% from the previous trading session. The stock's performance was behind the S&P 500's daily gain of 0.79%. Meanwhile, the Dow gained 0.26%, and the Nasdaq, a tech-heavy index, added 1.52%.

Shares of the coffee chain have appreciated by 7.82% over the course of the past month, outperforming the Retail-Wholesale sector's loss of 5.08%, and the S&P 500's loss of 1.82%.

The upcoming earnings release of Starbucks will be of great interest to investors. The company's earnings per share (EPS) are projected to be $0.65, reflecting a 30% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $9.43 billion, down 0.26% from the year-ago period.

SBUX's full-year Zacks Consensus Estimates are calling for earnings of $2.4 per share and revenue of $38.27 billion. These results would represent year-over-year changes of +12.68% and +2.91%, respectively.

It is also important to note the recent changes to analyst estimates for Starbucks. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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 varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.82% decrease. Right now, Starbucks possesses a Zacks Rank of #3 (Hold).

In terms of valuation, Starbucks is currently trading at a Forward P/E ratio of 43.38. This denotes a premium relative to the industry average Forward P/E of 20.23.

One should further note that SBUX currently holds a PEG ratio of 2.07. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As of the close of trade yesterday, the Retail - Restaurants industry held an average PEG ratio of 1.98.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 200, putting it in the bottom 19% of all 250+ industries.

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The Zacks Industry Rank gauges the strength of our 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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Starbucks Corporation (SBUX) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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