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Has Starbucks Stock Bottomed Out?

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Stock performance

As of June 22, Starbucks (SBUX) was trading at $51.24, which represents a 13.7% fall since the announcement of its fiscal second-quarter earnings on April 26. On June 19, Starbucks announced it was expecting global SSSG (same-store sales growth) of 1.0% in its fiscal third quarter, lower than analysts’ expectation of 3%. 

It stated that in China, the coffee chain’s second-largest market, it expected flat-to-slightly negative SSSG against 7% in the previous year. The announcement led to the company’s stock price reaching a new 52-week low of $50.36 on June 21.

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Year-to-date performance

Starbucks has been struggling with its SSSG for the last few quarters, which has been showing in its stock price. The company’s stock rose only 3.4% in 2017 and has fallen 10.8% since the beginning of 2018. In comparison, peers Dunkin’ Brands (DNKN) and McDonald’s (MCD) have returned 8.2% and -4.4%, year-to-date, respectively. The broader comparative S&P 500 (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 3.0% and 12.8%, respectively. XLY has 7.9% of its holdings invested in restaurants and travel companies.

Series overview

In this series, we’ll look at analysts’ revenue and EPS expectations for Starbucks for the next four quarters, as well as their recommendations. We’ll also look at Starbucks’s dividend policy and valuation. Let’s start by looking at analysts’ revenue estimates.

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