Starbucks (SBUX) Gains As Market Dips: What You Should Know

·3-min read

Starbucks (SBUX) closed at $98.72 in the latest trading session, marking a +0.06% move from the prior day. This move outpaced the S&P 500's daily loss of 0.16%. Elsewhere, the Dow lost 0.12%, while the tech-heavy Nasdaq lost 3.64%.

Prior to today's trading, shares of the coffee chain had lost 3.69% over the past month. This has lagged the Retail-Wholesale sector's loss of 1.21% and the S&P 500's gain of 0.07% in that time.

Starbucks will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.64, up 8.47% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.41 billion, up 10.13% from the year-ago period.

SBUX's full-year Zacks Consensus Estimates are calling for earnings of $3.41 per share and revenue of $35.89 billion. These results would represent year-over-year changes of +15.2% and +11.29%, respectively.

Investors should also note any recent changes to analyst estimates for Starbucks. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Starbucks currently has a Zacks Rank of #3 (Hold).

Digging into valuation, Starbucks currently has a Forward P/E ratio of 28.98. This represents a premium compared to its industry's average Forward P/E of 21.57.

Investors should also note that SBUX has a PEG ratio of 1.68 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 1.92 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 44, which puts it in the top 18% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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 to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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