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With a market cap of $107.1 billion, Starbucks Corporation (SBUX) operates as a roaster, marketer, and retailer of coffee worldwide. The Seattle, Washington-based company generates revenue through its retail stores, licensed stores, consumer packaged goods, and food service operations. It operates through various brands, including Starbucks coffee, Teavana tea, and Seattle's Best Coffee.
Companies worth more than $10 billion are generally described as “large-cap stocks,” Starbucks fits right into that category, with its market cap easily exceeding this threshold. The beverage giant distinguishes itself by offering customers various customization and personalization options.
SBUX has declined 12.2% from its 52-week high of $107.66, achieved in November 2023. Despite this, it has outperformed the broader Dow Jones Industrials Average’s ($DOWI) 9.1% rise with a notable 20.1% surge over the past three months.
However, in the longer term, SBUX stock is down 1.5% on a YTD basis, lagging behind the DOWI’s 10.3% gains. Moreover, shares of Starbucks Corporation have declined 4.6% over the past 52 weeks, underperforming DOWI’s 19.3% return over the same time frame.
SBUX has been trading above its 200-day and 50-day moving averages since early August, indicating a bullish price trend.
SBUX’s underperformance is primarily driven by struggles across all three of its key markets, lower consumer visits to its restaurants due to weak consumer spending, slower-than-anticipated recovery in China, and increasing competition in the industry. Starbucks' stock climbed 3.6% in early trading on Jul. 31, even after posting mixed results for fiscal Q3 2024.
The company met earnings expectations at $0.93 per share but fell slightly short of sales forecasts, reporting $9.1 billion in revenue. On Jul. 19, Starbucks shares surged over 6% following a Wall Street Journal report that activist investor Elliott Management had acquired a significant stake in the company.
Its rival, McDonald's Corporation (MCD), has gained 1.8% over the past 52 weeks, outperforming SBUX’s decline over the same time frame. However, on a YTD basis, MCD’s shares have declined 2.7% more than SBUX’s dip.
Despite SBUX’s underperformance relative to the broader market over the past year, analysts are moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 27 analysts in coverage, and the mean price target of $99.04 suggests a premium of 4.7% to its current levels.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
