The world's largest coffee chain Starbucks Corporation (SBUX) in Seattle, Wash., roasts and retails its specialty coffee, bottled coffee drinks, and a line of ice cream worldwide. The company delivered a year-over-year increase in revenues and EPS in its fiscal year 2022 first quarter but failed to surpass analysts’ estimates. The stock has declined 5.1% in price over the past month. The company said growing inflationary pressure, supply chain constraints, and labor shortages have forced it to increase its prices. Also, the company witnessed an unusual level of store closures in January.
As a result, analysts have revised their estimates lower for the current quarter. Furthermore, the company has announced that it will raise its prices further this year. However, given the current volatility in the stock markets, this overvalued stock might suffer a price retreat in the near term. SBUX’s 3.26x forward Price/Sales is 215.6% higher than the 1.03x industry average.
