Starbucks is downgraded to a sell as returns on tangible assets and earnings yield have deteriorated, with valuation now well above historical norms. Applying the DuPont framework, SBUX shows notable declines in asset efficiency, profitability, and leverage, despite early signs of progress from the Back to Starbucks plan. The China joint venture with Boyu Capital reflects a shift to an asset-light model, expected to boost margins but reduce reported international revenues.
Starbucks faced fresh pressure on Wednesday from a coalition of investors including public-sector pension funds that urged shareholders to vote against the reelection of two directors, citing persistent failure to manage labor relations.
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Some Starbucks investors are urging shareholders to oppose re-electing two board directors. The board members are responsible for "backsliding" labor relations, the concerned shareholders say.
Starbucks Corporation remains resilient, demonstrating robust fundamentals and strong brand loyalty, despite ongoing industry headwinds and cost pressures. SBUX delivered 5.5% YoY revenue growth in Q1 2026, with rising average sales per restaurant and effective expansion strategies supporting its dominance. Valuation remains attractive, with a target price of $111.71 and SBUX trading below its five-year average P/S ratio, indicating further upside potential.
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Two Business Insider reporters attended Starbucks' Investor Day, one in person and one virtually. The vibe in the building, featuring coffee samples and collectible merch, was enthusiastic.
Dissatisfaction among some Starbucks baristas has been brewing for years, ever since a Buffalo store voted to unionize in December 2021. More stores followed to form the Starbucks Workers United, which claims some 600 stores have joined its ranks—amounting to only 5% of the 11,000 North American stores.
Starbucks (SBUX) is executing a service-led turnaround, prioritizing throughput and customer experience to drive comparable sales growth and restore margins. SBUX delivered a 4% YoY increase in Q1 FY26 comparable store sales, signaling early success of the Back to Starbucks strategy despite ongoing margin pressure. Management reinstated FY26 guidance with positive comparable sales and operating profit margin improvement, and set FY28 targets for >5% sales growth and 13.5%-15% margins.
Starbucks posted revenue of $9.92 billion, which came in ahead of the forecast for $9.62 billion. Earnings per share (EPS), however, came in at 56 cents, which missed estimates by 3 cents.
Some investors said that Starbucks Corp. (NASDAQ: SBUX) earnings were a sign of a turnaround.
Starbucks Corporation (SBUX) Analyst/Investor Day Transcript