8 Apr

Starbucks Stock Fell after UBS Downgrade

WRITTEN BY Rajiv Nanjapla

Stock performance

Starbucks (SBUX) was trading in the red in today’s pre-market hours. The weakness in the broader equity market and the downgrade of the stock by UBS appear to have led to a fall in the company’s stock price.

Starbucks Stock Fell after UBS Downgrade


Year-to-date performance

Starbucks stock has increased by 16.5% since the beginning of 2019. The strong first-quarter performance in fiscal 2019 drove the company’s stock price. For the quarter ended on December 30, the company posted adjusted EPS of $0.68, outperforming analysts’ expectation of $0.65, while its revenue came in at $6.63 billion, beating analysts’ expectation of $6.49 billion. The company’s overall SSSG (same-store sales growth) also beat analysts’ expectations with a strong performance from the Americas segment and the China/Asia-Pacific segment.

In comparison, peers McDonald’s (MCD) and Dunkin’ Brands (DNKN) have returned 7.4% and 17.2%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests in restaurant and travel companies, has returned 18.7% YTD.

Analysts’ estimates

For fiscal 2019, analysts project Starbucks to post revenue of $26.29 billion, which represents a rise of 6.3% from $24.72 billion in fiscal 2018. During the same period, the company’s EPS are expected to rise by 11.7% to $2.70.

Valuation multiple

The increase in Starbucks’s stock price since the beginning of 2019 has also raised its valuation multiple. As of April 5, the company was trading at a forward PE multiple of 26.2x compared to 23.5x at the beginning of this year. In comparison, McDonald’s and Dunkin’ Brands were trading at a forward PE multiple of 23.0x and 24.7x, on the same day, respectively.

Latest articles

US crude oil production has more than doubled since 2009 and grew by 1.1% over the last year. Currently, there are 133 operable refineries in the US.

The cannabis industry is fighting against the ongoing US-China trade war and recessionary worries, which have hurt valuations across the global market.

Higher revenues, increased ticket prices, and lower fuel costs are likely to drive American Airlines' Q3 earnings higher despite its Boeing MAX woes.

HEXO plans to report its Q4 earnings before the market opens on October 24. October has been tough for Hexo, with its stock falling 31.2% as of October 18.

Today, Advanced Micro Devices (AMD) rose 4% to over $32, making it one of the top Nasdaq gainers. Morgan Stanley raised its price target for AMD stock.

Early in 2019, President Donald Trump warned that China could overtake the US as a global power. He vowed that this would not happen under his leadership.