Is Starbucks Stock a Buy as Growth Rebounds but Valuation Stays High?

Starbucks Growth Is Improving

Third-quarter global comparable sales increased 7.9%, driven by a 4.2% rise in transactions and 3.5% ticket growth. North America comparable sales climbed 8.1%, including a 4.5% transaction gain and 3.5% increase in average ticket.

The improvement extended across dayparts, income groups and access points. Delivery remained a ticket driver, while food attachment reached a third-quarter record. That mix suggests the rebound is not being sustained by pricing alone.

SBUX Trades at a Premium

SBUX trades at 34.8X forward 12-month earnings, above the Zacks sub-industry’s 22.9X and its own five-year median of 27.8X. The premium raises the execution bar because part of the expected earnings recovery may already be reflected in the share price.

Restaurant investors have alternatives with different operating profiles. McDonald’s Corporation MCD runs a heavily franchised global system, while Dutch Bros Inc. BROS is a drive-thru beverage operator and franchisor. Those comparisons reinforce the need to judge Starbucks’ valuation against both mature restaurant models and faster-growing coffee concepts.

Starbucks Has More Earnings Levers

Starbucks is benefiting from higher food attachment, delivery demand, beverage modifications and loyalty engagement. U.S. 90-day active Rewards membership reached 35.8 million, while repeat orders following Free Mod Mondays indicate that customization can support frequency and ticket growth.

Channel Development adds a separate high-margin earnings stream. Third-quarter revenues increased 21.5% to $587.9 million, operating income rose 40.2% to $306.2 million and operating margin reached 52.1%. That business can help diversify profit growth when store-level costs remain elevated.

SBUX Faces Execution Risk

Margin recovery still depends on sustained sales leverage and cost discipline. Labor investments, unfavorable product mix and restructuring costs continued to offset some of the benefits from stronger sales, lower inflation and tariff refunds.

Restructuring and impairment expenses increased to $302.6 million from $20.8 million a year earlier. Starbucks is also modernizing inventory ordering, staffing, scheduling and point-of-sale systems. These initiatives may improve productivity, but they add implementation costs and operational risk during the turnaround.

Starbucks Signals Favor Patience

The improving demand trend and raised guidance support a more constructive view of Starbucks’ earnings path. Management now expects fiscal 2026 adjusted earnings of $2.55-$2.65 per share, up from the prior range of $2.25-$2.45.

The stock currently carries a Zacks Rank #3 (Hold). It also has a Growth Score of A, Momentum Score of A, VGM Score of B and Value Score of D. The favorable growth and momentum readings recognize improving operating and estimate trends, while the weaker value reading reflects a less attractive entry point. Together, these signals support a measured hold-or-wait stance rather than an aggressive purchase at the current valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research