Is Starbucks (SBUX) a Buy or Sell in 2026? A Deep Dive into Earnings Revisions and Valuation Misalignment

As 2026 unfolds, Starbucks (SBUX) remains a focal point for investors navigating the intersection of earnings momentum and valuation dynamics. With analysts revising profit forecasts and valuation metrics diverging from industry benchmarks, the question of whether to buy or sell the stock hinges on a nuanced analysis of these trends.

Earnings Estimate Revisions: A Mixed Signal

Analysts have trimmed their expectations for Starbucks' Q1 2026 earnings, projecting $0.59 per share-a 14.5% decline from $0.69 in the prior year. This downward revision reflects near-term headwinds, including inflationary pressures and shifting consumer spending patterns. However, the broader fiscal year 2026 consensus estimate of $2.35 per share still signals a 10.3% year-over-year increase.

Notably, this figure has dipped by 3% over the past 30 days, underscoring growing skepticism about the company's ability to sustain growth. For fiscal 2027, the consensus of $3.02 per share implies a 28.7% jump from 2026 forecasts, though this estimate has fallen 0.6% in the last month. These revisions highlight a tug-of-war between optimism about long-term resilience and caution about short-term challenges.

Revenue projections offer a more stable outlook, with analysts forecasting $39 billion in sales for 2026-a 4% increase-and 3% same-store sales growth. While these figures suggest operational strength, they must be weighed against the earnings-side pessimism.

Valuation Metrics: Premium Pricing Amid Growth Hurdles

Starbucks' valuation appears stretched relative to its earnings trajectory. The stock trades at a forward price-to-earnings (P/E) ratio of 36.34, significantly above the 19.8 average for the Retail - Restaurants industry. This premium implies that investors are paying a hefty price for anticipated growth, yet recent earnings revisions cast doubt on the sustainability of such expectations.

The price-to-earnings-to-growth (PEG) ratio, which adjusts for growth prospects, offers a more nuanced perspective. Starbucks' PEG ratio of 1.77–1.78 is lower than the industry average of 2.22–2.30 according to Zacks, suggesting it is relatively undervalued when factoring in projected earnings growth. However, this metric assumes that current growth estimates will hold, a premise now in question given the 3% drop in the 2026 consensus over the past month.

Compounding these concerns is Starbucks' Zacks Rank of #5 (Strong Sell), a stark signal of analyst pessimism. This rating reflects not only earnings revisions but also broader uncertainties about the company's ability to navigate macroeconomic risks and competitive pressures.

The Investment Dilemma: Buy or Sell?

The case for selling Starbucks in 2026 rests on two pillars: the recent erosion of earnings estimates and the stock's elevated valuation. A forward P/E of 36.34 implies investors are banking on robust growth, yet the 30-day decline in consensus estimates suggests that optimism may be unwarranted. Meanwhile, the Zacks Rank underscores a lack of confidence in management's ability to deliver on these expectations.

Conversely, the PEG ratio's relative attractiveness and the 28.7% projected growth for fiscal 2027 could justify a cautious buy stance for long-term investors. However, this argument hinges on the assumption that near-term challenges will abate and that the company can reaccelerate earnings growth. Given the current trajectory, such an outcome appears uncertain.

Conclusion

Starbucks' valuation misalignment-trading at a premium despite slowing earnings growth-presents a compelling case for selling in 2026. While the stock's long-term fundamentals remain intact, the combination of downward revisions, a weak Zacks Rank, and a stretched P/E ratio suggests that the market is overpaying for uncertain prospects. Investors may find better opportunities elsewhere until Starbucks can demonstrate a clearer path to reinvigorating earnings momentum.