Starbucks (SBUX) Suffers a Larger Drop Than the General Market: Key Insights

Starbucks (SBUX) ended the recent trading session at $92.55, demonstrating a -3.42% change from the preceding day's closing price. The stock's change was less than the S&P 500's daily loss of 1.51%. At the same time, the Dow lost 0.97%, and the tech-heavy Nasdaq lost 2.01%.

Prior to today's trading, shares of the coffee chain had gained 0.03% outpaced the Retail-Wholesale sector's loss of 3.84% and the S&P 500's loss of 3.63%.

The investment community will be paying close attention to the earnings performance of Starbucks in its upcoming release. The company is forecasted to report an EPS of $0.42, showcasing a 2.44% upward movement from the corresponding quarter of the prior year. Meanwhile, our latest consensus estimate is calling for revenue of $9.1 billion, up 3.87% from the prior-year quarter.

SBUX's full-year Zacks Consensus Estimates are calling for earnings of $2.31 per share and revenue of $38.37 billion. These results would represent year-over-year changes of +8.45% and +3.19%, respectively.

It is also important to note the recent changes to analyst estimates for Starbucks. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. 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, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. The Zacks Consensus EPS estimate has moved 0.27% lower within the past month. Starbucks is currently sporting a Zacks Rank of #3 (Hold).

Looking at valuation, Starbucks is presently trading at a Forward P/E ratio of 41.56. This denotes a premium relative to the industry average Forward P/E of 19.23.

Meanwhile, SBUX's PEG ratio is currently 2.14. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As the market closed yesterday, the Retail - Restaurants industry was having an average PEG ratio of 1.93.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 169, finds itself in the bottom 32% echelons of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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

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