Everyone’s favorite coffee giant – Starbucks (SBUX) – is on track for its greatest single-day percentage increase since February 2020 – right before the pandemic restrictions set in. So far, the stock is up 10% in Friday morning trading. How did we get here?
Yesterday after market hours, Starbucks quietly released its fiscal fourth-quarter earnings report. And as you can surmise based on the movement the stock has seen so far this morning, results were solid. In fact, the coffee chain beat analyst expectations on US same-store sales and profits.
Revenues rose 3.1% to $8.4 billion over the same period last year. But this figure is weighted down by underperformance abroad. Just here in the US, revenue grew 11% over the last year, even after the company raised prices on customers. Even with coffee priced up to 6% higher over the last 12 months, Starbucks reports that traffic didn’t take a hit. Daily visitors were 95% of pre-pandemic levels over the past quarter.
It’s worth noting that revenue from China was down 16% as the country maintains strict COVID-19 lockdowns. With that said, things do appear to be turning around for the coffee chain globally – as this figure is quite the improvement over the last quarter which saw a 44% decrease in revenue throughout the China segment. And, other international companies picked up the slack for China – resulting in overall international comp sales rising 7%.
All of this led to Starbucks executives doubling down on their optimistic outlook for 2023. In fact, the company expects earnings growth between 15%-20% over the coming three-year horizon. With that said, they do expect 2023 to be the toughest year in this window – as there is still much uncertainty surrounding China and COVID-19 in the immediate future.
But, that hasn’t deterred analysts from buying what Starbucks is selling. Jefferies analyst Andy Barish maintains his “Buy” rating and moved his price target to $100. Starbucks stock currently sits around $92.57 and is still down 20% in the past year with today’s recovery. However, this is on track with the rest of the S&P 500.
So – is this a good time to buy Starbucks stock? If you’re currently holding a position, is now the time to capture profits and sell off shares? If you’re pondering your next move with Starbucks stock, you’re in the right place. VectorVest’s stock analysis software can give you a clear answer as to whether you should buy, sell, or hold SBUX right now.
Despite Poor Upside Potential, Starbucks Stock Has a Strong Price Trend Right Now
VectorVest simplifies trading by summarizing everything you need to know to make accurate, informed trading decisions into three ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).
Interpreting these ratings is very easy, as they sit on a scale of 0.00-2.00 – with 1.00 being the average, and anything greater indicating overperformance. Pick the highest-rated stocks to win more trades!
Making things even easier for investors like yourself, VectorVest even provides a clear buy, sell, or hold recommendation based on the culmination of these ratings. No more guessing games, no more emotion influencing your decision-making – just effortless stock analysis based on tried-and-true investment principles. As for SBUX, here’s the current situation:
- Poor Upside Potential: the RV rating is an indicator of long-term price appreciation potential. It’s projected up to three years out. And despite the optimism within Starbucks, VectorVest has calculated a poor RV rating of just 0.81. VectorVest also deems SBUX overvalued with a current value of $46.48 compared to a current price of $92.55.
- Fair Safety: an indicator of risk, the RS rating looks at a company’s financial consistency and predictability, debt-to-equity ratio, and business longevity. As for SBUX, the RS rating of 1.03 is slightly above the average and is considered fair.
- Very Good Timing: as you’ll see looking at the past month or so for SBUX, there is a positive price trend with wind in its sails – and the very good RT rating of 1.26 reflects that. This rating looks at the direction, dynamics, and magnitude of a stock’s price movement day over day, week over week, quarter over quarter, and year over year
The overall VST rating for SBUX is fair at 1.07. What does that mean, exactly? Should you buy, sell, or hold SBUX after today’s news? For a clear, unbiased answer on what your next move should be, get a free stock analysis today.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for SBUX, it has poor upside potential, fair safety, and very good timing.
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