Seattle-based Starbucks Corporation (SBUX) is a global roaster and retailer of specialty coffee with a market cap of $86.21 billion. Besides its fresh, rich-brewed coffees, its offerings include many complimentary food items and a selection of premium teas and other beverages sold mainly through its retail stores. The company operates through three segments: North America, International, and Channel Development.
Shares of the world’s largest coffeehouse chain have underperformed the broader market considerably over the past year. SBUX has declined 28.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 26.2%. In 2024 alone, SBUX stock is down 20.7%, while the SPX is up 9.5% on a YTD basis.
Narrowing the focus, SBUX’s underperformance looks slightly less when compared to the AdvisorShares Restaurant ETF (EATZ). The exchange-traded fund has gained about 18.3% over the past year, underperforming the S&P 500 Index. The ETF’s 6.5% returns on a YTD basis outshine the stock’s double-digit loss over the same time frame.
Following its disappointing second-quarter earnings report, SBUX stock plunged nearly 16%. The company saw same-store sales in the U.S. decline 3%, and traffic to its stores fell 7%. Similarly, its comparable-store sales fell 11% in China, and traffic to its stores declined 4%. Starbucks attributed its underwhelming performance to macroeconomic weakness, competition, severe weather in some parts of the U.S., and fewer visits by occasional customers in the U.S. and China.
For the current fiscal year, ending in September, analysts expect SBUX to report an EPS growth of 2.5% to $3.63 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in two of the last four quarters while missing the forecast on two other occasions.
Among the 24 analysts covering SBUX stock, the consensus rating is a “Moderate Buy.” That’s based on nine “Strong Buy” ratings, one “Moderate Buy,” and 14 “Holds.”
This configuration is slightly less bullish than three months ago, with ten suggesting a “Strong Buy,” one giving a “Moderate Buy,” and 14 advising a “Hold.”
Recently, Piper Sandler analyst Brain Mullan maintained a “Neutral” rating on SBUX stock and lowered the price target from $88 to $85.
The mean price target of $92.69 represents a 21.8% premium to SBUX’s current price levels. The Street-high price target of $120 suggests an ambitious upside potential of 57.7%.
On the date of publication, Dipanjan Banchur 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.
