Is Now the Time to Buy This Popular Restaurant Stock?

NASDAQ: SBUX | Starbucks Corp. News, Ratings, and Charts

SBUX – Popular restaurant stock Starbucks (SBUX) beat revenue estimates by more than $98 million in the last reported quarter. Despite the broader market turmoil, it has gained more than 9% over the past month and might soar higher, given its steady fundamentals. So, should you invest in the stock now? Let’s find out…

Restaurant giant Starbucks Corporation (SBUX) beat revenue estimates by $98.18 million for its fiscal 2022 fourth quarter. Interim CEO Howard Schultz said, “We saw accelerating demand for Starbucks coffee around the world in Q4 and throughout the year.”

He added, “Reinvention will touch, and elevate, every aspect of our Starbucks partner, customer and store experiences, and ideally position Starbucks to deliver accelerated, sustainable, long-term, profitable growth and value creation beginning in 2023.”

Moreover, the company, along with DoorDash, Inc. (DASH), recently announced the expansion of their partnership with a new delivery service in Northern California, Texas, Georgia, Florida, and other select markets.

The collaboration is expected to fortify revenue generation for both companies amid heightened demand for delivery services.

Furthermore, SBUX has paid dividends for 12 consecutive years. Its dividend payouts have increased at a 13.8% CAGR over the past five years. Its current dividend yield is 1.96%, while its four-year average yield is 1.88%.

SBUX has gained 9.3% over the past month to close the last trading session at $108.40. It has gained 27.9% over the past six months and 11.5% over the past year.

Here is what could shape SBUX’s performance in the near term:

Solid Top-line Growth

SBUX’s revenues from company-operated stores increased marginally year-over-year to $6.90 billion for the quarter that ended October 2, 2022. Its revenues from licensed stores came in at $998.40 million, up 25.7% year-over-year, while its total net revenues came in at $8.41 billion, representing a 3.3% year-over-year rise.

Moreover, its U.S. store count came in at 15,878, up 3% year-over-year.

Favorable Analyst Estimates

SBUX’s revenue is expected to increase 11.7% year-over-year to $36.01 billion for the current fiscal year 2023. Its revenue is expected to increase 11% year-over-year to $39.98 billion for the next fiscal year 2024.

In addition, SBUX’s EPS is estimated to increase 16.2% and 18.9% year-over-year to $3.44 and $4.09 for 2023 and 2024, respectively. Also, its EPS is expected to rise 17.8% per annum for the next five years.

Robust Profitability

SBUX’s trailing-12-month EBITDA and net income margins of 18.52% and 10.18% are 67% and 96.5% higher than the industry averages of 11.09% and 5.18%.

In addition, its trailing-12-month ROTC and ROTA of 16.61% and 11.73% are 157.2% and 158.3% higher than the industry averages of 6.46% and 4.54%, respectively.

POWR Ratings Reflect Promising Outlook

SBUX’s overall rating of B equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories.

SBUX has an A grade for Sentiment, in sync with favorable analyst estimates.

It has a B grade for Quality, consistent with its higher-than-industry profitability margins.

In the 45-stock B-rated Restaurants industry, SBUX is ranked #16.

Click here for the additional POWR Ratings for SBUX (Growth, Value, Momentum, and Stability).

View all the top stocks in the Restaurants industry here.

Bottom Line

SBUX saw strong top-line growth in its latest reported quarter. Moreover, Wall Street analysts expect the stock to hit $111.40 shortly, indicating a potential upside of 2.8%. Given its positive outlook and robust profitability, I think SBUX might be an ideal restaurant stock to buy now.

How Does Starbucks Corporation (SBUX) Stack up Against Its Peers?  

While SBUX has an overall POWR Rating of B, one might consider looking at its industry peers, Nathan’s Famous, Inc. (NATH), Biglari Holdings Inc. (BH), and Ark Restaurants Corp. (ARKR), which have an overall A (Strong Buy) rating.

What To Do Next?

Get your hands on this special report:

3 Stocks To DOUBLE This Year

What gives these stocks the right stuff to become big winners, even in this brutal stock market?

First, because they are all low-priced companies with the most upside potential in today’s volatile markets.

But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, and they excel in key areas of growth, sentiment and momentum.

Click below now to see these 3 exciting stocks that could double or more in the year ahead.

3 Stocks To DOUBLE This Year

SBUX shares were trading at $108.45 per share on Tuesday morning, up $0.05 (+0.05%). Year-to-date, SBUX has gained 9.32%, versus a 5.33% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SBUXGet RatingGet RatingGet Rating
NATHGet RatingGet RatingGet Rating
BHGet RatingGet RatingGet Rating
ARKRGet RatingGet RatingGet Rating

Most Popular Stories on

Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

3 High-Yield Dividend Stocks to Boost Your Portfolio

Even though inflation appears to be cooling down, it still remains above the Fed’s 2% target. Amid ongoing geopolitical tensions, investors could consider looking into high-yield dividend stocks, Verizon Communications (VZ), Altria Group (MO), and Ares Capital (ARCC). Keep reading...

3 Fintech Stocks Revolutionizing Financial Services

Fintech is causing a revolutionary shift in the financial services market and this could be the right time to scoop up fundamentally strong fintech stocks like PayPal Holdings (PYPL), NerdWallet (NRDS), and Qifu Technology (QFIN). Read more...

3 Value Stocks With Strong Fundamentals to Buy Now

Value investing is highly favored as it focuses on purchasing undervalued stocks with solid fundamentals, providing the potential for high returns with lower risk and a disciplined, long-term approach. Therefore, it could be wise to invest in fundamentally sound, value stocks Expedia Group (EXPE), Incyte (INCY), and Albertsons Companies (ACI) for substantial long-term returns. Keep reading...

Stock Alert: Breakout or Fake Out?

The S&P 500 (SPY) officially made new highs this week. Perhaps a reason to celebrate more gains on the way...or perhaps there are signs this move is hollow leading to more downside soon on the way. To help solve this riddle, 44 year investment veteran Steve Reitmeister shares his views along with a trading plan and top picks to stay on the right side of the action. That is what Steve Reitmeister will cover in his latest commentary below. Read on for more...

Read More Stories

More Starbucks Corp. (SBUX) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SBUX News