Stock Analysis | Starbucks Outlook - Technical Weakness and Mixed Analyst Views

Market Snapshot

Headline Takeaway: Starbucks is currently in a bearish technical state, with analysts offering a range of views and mixed fundamental signals. Investors are advised to proceed with caution.

News Highlights

Recent news surrounding the broader hospitality and restaurant industries includes significant developments:

• Trump’s Tariffs: New tariffs on Canada, Mexico, and China could drive up costs for restaurants and affect Starbucks' supply chain. This could impact margins and pricing strategies.
• Restaurant Disaster Relief: DoorDash is distributing grants to restaurants affected by wildfires, highlighting the vulnerability of small businesses in the sector. Starbucks may face similar risks in disaster-affected areas.
• Hyatt’s Expansion: Hyatt is launching a new brand, Unscripted, targeting independent upscale hotels. While not directly related to Starbucks, it reflects broader consumer trends in the hospitality industry.

Analyst Views & Fundamentals

The current analyst consensus is mixed, with 8 “Buy” ratings and 5 “Neutral” ratings from 12 active institutions. The simple average rating score is 3.62, while the performance-weighted rating is 3.64, indicating a relatively neutral market outlook. These scores are consistent with the current price trend, which shows a 4.70% decline in the last 5 days.

Key fundamental factors and their values include:

• Return on Assets (ROA): 2.05% — Internal diagnostic score: 0.13
• Net Income / Revenue: 3.68% — Internal diagnostic score: 0.23
• Total Profit (YoY Growth Rate): -35.72% — Internal diagnostic score: 0.17
• Net Cash Flow from Operating Activities (YoY Growth Rate): -18.20% — Internal diagnostic score: 0.09
• Inventory Turnover Days: 24.57 — Internal diagnostic score: 0.08
• Long-Term Debt to Working Capital Ratio: 7.02% — Internal diagnostic score: 0.11

These mixed fundamental signals suggest that Starbucks is facing some challenges in profitability and cash flow, although its inventory management is relatively healthy. Investors should keep a close eye on future earnings and operational improvements.

Money-Flow Trends

Big money is showing a negative trend with inflow ratios across all sizes. The block inflow ratio is 0.485, indicating that large institutional investors are cautious. Retail investors are also showing a negative trend, with an overall inflow ratio of 0.487. This suggests a lack of confidence in the short term.

Key Technical Signals

Technically, Starbucks is in a weak position with 2 bearish indicators and 0 bullish indicators. The internal technical score is 1.67, indicating a weak trend and suggesting to avoid the stock for now.

• WR Oversold: Internal diagnostic score: 1.98 — This indicator has shown 41 historical signals with an average return of -0.20% and a win rate of 43.90%.
• Dividend Payable Date: Internal diagnostic score: 1.35 — This indicator has shown 3 historical signals with an average return of -0.10% and a win rate of 33.33%.

Recent technical signals include multiple WR Oversold triggers between August 21 and August 26, with one Dividend Payable Date signal on August 29. These patterns indicate a period of relative calm followed by bearish activity.

Conclusion

With mixed analyst ratings, bearish technical signals, and recent negative price movements, Starbucks appears to be in a vulnerable position. Investors are advised to consider waiting for a pull-back before entering or adding to positions. Keep an eye on upcoming earnings and any changes in the company's operational strategy in response to the broader economic and trade uncertainties.