Starbucks Shares Show Strong Growth Amid Market Fluctuations

Seattle-based Starbucks Corporation (SBUX), valued at $127.3 billion, is a global leader in coffee roasting, marketing, and retail. The company’s stores offer a diverse range of products, including coffee, tea, beverages, roasted whole beans, ground coffees, single-serve items, ready-to-drink beverages, and food products.

Fitting the criteria of a “large-cap” stock, SBUX’s valuation exceeds $10 billion. Recognized worldwide, the company leverages rising consumer disposable incomes to sustain steady revenue growth.

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Despite its strengths, Starbucks recently experienced a 4.9% decline from its 52-week high of $117.46, reached on March 3. However, over the last three months, SBUX shares increased by 12.6%, outperforming The Consumer Discretionary Select Sector SPDR Fund (XLY), which fell by 7.3% during that period.

Looking at the longer trends, SBUX shares have risen 22% over the past six months and 22.4% over the past year. Comparatively, XLY increased by 13% over six months and 17.3% over a year.

SBUX has consistently traded above its 50-day and 200-day moving averages since January, despite the market’s fluctuations.

Starbucks’ strong performance can be linked to favorable consumer spending trends. With disposable personal income rising by 0.9% in January, consumers are more inclined to spend on discretionary products and services, benefiting Starbucks.

On January 29, following the release of its Q1 earnings, Starbucks’ stock climbed 8.1%. The company reported net revenues of $9.4 billion and opened 77 net new stores during the quarter. Additionally, the earnings per share (EPS) was $0.69, exceeding Wall Street’s expectations by 4.6%.

In contrast, McDonald’s Corporation (MCD), a key competitor in the restaurant industry, has seen more modest growth, rising 6.8% over the last six months and 5.1% over the past 52 weeks.

Wall Street analysts maintain a cautiously optimistic outlook for SBUX. The stock currently holds a consensus “Moderate Buy” rating from 31 analysts, trading above the mean target of $107.34.

On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

 

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