Restaurants · #61 in the Retail 100

Starbucks

SBUX

Our rating: hold
12-month target: $122.32 +16.7%
Expected vs. S&P 500: +0.6 ptsSee the math
Next earnings: Jan 27In 83 daysEarnings calls page ↗

An extra 53rd week supplies about a fifth of the profit growth in Starbucks's fiscal 2027 forecast, so underlying growth is slower than the headline.

Summary

Starbucks runs most of its U.S. coffee shops itself, so profit rests on store traffic and the cost of the baristas who serve it. Under CEO Brian Niccol, same-store sales rose 7.2% last quarter and adjusted operating margin (operating profit as a share of sales, excluding one-time items) reached 14.0%. Management's fiscal 2027 forecast keeps margin in that range, so further growth must come from sales. The stock depends on margin holding while visits keep rising.

$104.77

+$20.24 (+23.94%)Past year

What Starbucks does

Starbucks runs or licenses about 41,000 coffee shops worldwide. Most revenue comes from the cafes it runs itself, so profit depends on store traffic and the cost of the baristas who serve it.^34,35

What it sells

Company-run cafes81% of revenue, Q3 FY2026
Stores Starbucks runs and staffs itself, mostly in North America. Drinks are about 73% of their sales and food 23%.
Licensed stores13% of revenue, Q3 FY2026
Cafes run by partners, including the new China joint venture. Starbucks earns royalties and product sales while partners pay the store costs.
Grocery coffee and drinks7% of revenue, Q3 FY2026
Bagged coffee, single-serve pods and bottled drinks sold in supermarkets, mostly through partnerships with Nestlé and PepsiCo.

Who buys it

Individual coffee drinkers, with the Starbucks Rewards program and app built to bring them back more often. North America is 79% of revenue, so U.S. cafes decide results. Since March, a joint venture runs China, and Starbucks keeps a 40% stake.

Where you've seen it

Bottled Frappuccino and bags of Starbucks coffee on supermarket shelves, sold through Nestlé and PepsiCo.

The backstory

Starbucks lost customers under former CEO Laxman Narasimhan: U.S. transactions fell for three straight quarters to September 2024, by as much as 10%, as mobile orders flooded stores and a heavily customized menu slowed every drink. In August 2024 the board replaced him with Chipotle's Brian Niccol, and the stock jumped as much as 24%. Niccol's fix is speed.

How the business makes money

Why Starbucks's profit depends on drinks per hour^{1,3,6,8,9,26,27,28,29,30,31,32}

Step 1
Starbucks runs most of its U.S. cafes itself, so it keeps the whole sale but also pays the baristas.
Step 2
A shorter menu and more staff at busy hours make drinks faster, aiming to hand each one over in under four minutes.
Step 3
Shorter waits bring customers back. U.S. same-store sales rose 7.7% last quarter, with visits up 2.4% and spending per visit up 5.2%.
Step 4
The fix added about $500M in labor, so North America kept about 12¢ of each $1 of sales as profit last quarter, down from 21¢ in 2024.
What shareholders get
Store profits fund about 1,500 remodels. The stock is priced as if that profit per dollar recovers.

Advantages

Far more stores than any coffee rival

Strong advantage

Hard to copy. Starbucks has about 16,900 U.S. stores, more than any coffee rival. Niccol is pruning weak ones, closing about 627 in 2025.^2,7,10

Its app and Rewards program

Strong advantage

A real strength, though not unique. Rewards has 35.8M active U.S. members, letting Starbucks target offers to each one. Dutch Bros runs 73% of transactions through loyalty.^3,11

Bigger orders without higher prices

Supporting

Helpful, not decisive. Customers are spending more per visit, which management credits to food, delivery and paid drink add-ons rather than price.³

What's changing

From proving the turnaround to proving growth

Management says the turnaround is now a growth plan and guides fiscal 2027 earnings to $3.15 to $3.25 a share, including a 53rd week worth slightly more than $0.10. Starbucks closed about 250 North American stores in September and plans about 1,200 net new stores worldwide next year. It also plans to restart share buybacks.^{36,7,22,38,39}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Starbucks
Starbucksthis stock	$119.40B	Starbucks runs or licenses about 41,000 coffee shops worldwide. Most revenue comes from the cafes it runs itself, so profit depends on store traffic and the cost of the baristas who serve it.
McDonald'sMCD	$177.50B	Burgers and fries first, with cheap coffee and new drinks sold through the drive-thru.	McDonald's wins on price and speed; Starbucks wins on coffee and its app.¹⁴
Dutch BrosBROS	$7.34B	Drive-thru stands selling sweet cold drinks and energy drinks, opening new stores fast.	Dutch Bros is much smaller but growing a bit faster; Starbucks is the giant.^11,13
Luckin CoffeeLKNCY	$9.25B	Cheap coffee ordered through an app, from small pickup stores across China.	Luckin beat Starbucks in China on price; in the U.S. it's still tiny.¹⁵
Dunkin' (Inspire Brands, private)private	—	Cheap coffee and donuts for commuters, through mostly franchised drive-thru stores.	Dunkin' sells fast, cheap mornings; Starbucks sells premium drinks in nicer stores.

Leadership

Who runs the company, and how the stock has done under the CEO.

SBUX +19.5%S&P 500 +41.7%Total return with dividends since Sep 2024

20252026

Brian NiccolChairman and CEO2 yrs

Cathy SmithEVP and CFO1.5 yrs

Mike GramsCOO1.3 yrs

When Niccol was named (Aug 2024), the stock moved +24.5% that day; the S&P 500 moved +1.6%.

Wall Street on Niccol: PositiveTD Cowen upgraded the stock to Buy, expecting profit margins to recover. Melius Research moved up to Hold from Sell after North America margins grew, noting that tariff refunds helped.^L5,L6

Leadership sources (6) · researched Oct 2026

L1Starbucks names Brian Niccol as chairman and chief executive officer · Starbucks, 2024-08-13
L2Starbucks names new CFO in latest leadership overhaul · Fortune, 2025-03-04
L3Starbucks Corp. Form 8-K (appointment of Chief Operating Officer) · Starbucks / SEC, 2025-06-04
L4Starbucks Reports Q3 Fiscal Year 2026 Results · Starbucks, 2026-07-29
L5Here's why a Starbucks bear changed his tune and upgraded the stock · CNBC, 2026-08-03
L6TD Cowen Just Upgraded Starbucks to Buy: Margin Recovery, Sales Drivers Power Comeback Story · 24/7 Wall St., 2026-05-14

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will Starbucks hold an adjusted operating margin of 13.5% or more in fiscal 2027, or was last quarter's 14.0% its peak?^{1,3,5,16,20,33,36,37,38,39}

Bull case: why buyers buy

If visits keep rising and labor costs level off, margin holds near 14% and earnings move toward management's fiscal 2028 target of $3.35 to $4.00 a share.

Margin target arrived early. Management guides fiscal 2027 adjusted margin to 13.5% to 14.0%, inside its fiscal 2028 range of 13.5% to 15%.
Pricing stays restrained. U.S. visits rose 2.4% last quarter, and management plans price increases well below inflation.
Management has a savings plan. It expects $2B of cost savings by fiscal 2028, and Bank of America calls its targets conservative.
Buybacks come back. Starbucks bought no shares in fiscal 2026 and plans to restart repurchases in fiscal 2027, which lifts earnings per share.

Bear case: why sellers sell

If visit growth keeps slowing and the extra labor cost is permanent, margin stalls near 14% and a stock priced for recovery looks expensive.

Visit growth is thin. U.S. visits rose 2.4% last quarter, while spending per visit rose 5.2%, so most of the gain is spending.
Margin guidance shows no further gain. Management expects 13.5% to 14.0% in fiscal 2027, against 14.0% last quarter.
North America margin is still far below 2024. It was 12.3% last quarter, about 16% before restructuring, against 21.0% in fiscal Q3 2024.
International is stalling. Same-store sales rose 0.9% against about 3.3% expected, and visits fell 2.8%.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

U.S. same-store sales▲ improving

+7.7% last quarter: 2.4% more transactions and a 5.2% larger average purchase^36,37

Shows whether faster service keeps bringing customers in. Management expects North America growth of about 4% in fiscal 2027.

North America operating margin▲ improving

12.3% last quarter after $270M of restructuring charges, about 16% before them; 4.5% a year ago^36,16

Shows whether the extra sales cover the extra labor cost. Margin was 21.0% in fiscal Q3 2024.

Company-wide adjusted operating margin■ flat

14.0% last quarter, up from 9.4% a year earlier³⁶

Shows how much of each sales dollar is profit. Management guides 13.5% to 14.0% for fiscal 2027.

Next earnings report

Jan 27

In 83 days

Earnings calls page ↗

Expected earnings per share: $0.75
Expected revenue: $9.36B

What to listen for: Whether U.S. visits keep growing as spending per visit drives sales, and whether adjusted margin stays near 14% after the store closures.²³

What would prove this wrong

✕U.S. visits stop growing and price or mix alone drives sales.
✕Adjusted operating margin falls below 13.5%, the bottom of management's fiscal 2027 range.
✕A union contract or wage increases add large costs before margin recovers.
✕McDonald's and Dutch Bros win customers from Starbucks in afternoon cold drinks.

Our ratingHoldas of Nov 3 close, $104.77 · what ratings mean

Fiscal 2027 guidance matched expectations with margin flat at about 14%, and the stock trades above its five-year typical valuation, so expected return only matches the S&P 500.

12-month target: $122.32 (+16.7%)
Plus dividend: +2.4%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: +0.6 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $104.77

Target $122.32

bull case25% likely

$147.85 +41%

Visits keep rising and labor costs level off, so adjusted margin reaches the top of the 13.5% to 15% target and earnings approach $4.00.

$3.89 earnings per share × 38 = $147.85

base case55% likely

$119.18 +14%

Sales keep growing and adjusted margin holds near 14%, so earnings land inside management's fiscal 2027 range of $3.15 to $3.25 and grow toward $3.72 in fiscal 2028.

$3.72 earnings per share × 32 = $119.18

bear case20% likely

$99.03 -5%

Visit growth fades and the higher labor cost proves permanent, so margin slips to the bottom of the target and earnings land in the lower half of the range.

$3.53 earnings per share × 28.1 = $99.03

Why these odds: Yahoo's fiscal 2027 estimate rose from $3.02 to $3.13 over 90 days, and Starbucks beat the last three quarters. But the new forecast only matched consensus and the stock fell 1.7%. History uses 20 quarter-end readings since January 2022; no extra shares assumed.

How the prices are built: Wall Street expects earnings per share of $3.72 for the year starting a year from now (analysts range from $3.33 to $4.06). Today the stock trades at 33.1 times next year's earnings per share; its five-year middle is 29.^{20,23,24,36,41}

What tests the call: Fiscal Q1 2027 earnings (Feb 2)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 30; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $104.77, investors pay 77% more than they pay for the average stock's earnings

Starbucks trades at 33 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is above its five-year middle of 29.

Analysts expect earnings to grow about 17% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. The premium is a bet that Starbucks's earnings keep growing faster than the market's for years, not just next year.

Starbucks multiple: 33×
S&P 500 multiple: 19×
Base case: +14%
Bear case: −5%

The skewOur bear case loses about 40¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

FQ4 2026 results, reported Oct 29

Global same-store sales rose 7.2% against about 6.2% expected and adjusted earnings per share beat by 9 cents, but revenue missed and the fiscal 2027 forecast matched expectations.^{36,37,38,39,40,42}

Reported Oct 29	Expected	Actual	Difference
Earnings per share	$0.72	$0.80	+11.3%
Revenue	$9.22B	$9.14B	-0.9%

Stock reaction: Down 1.7% the next day, from $105.51 to $103.67

Why the stock moved

Up: adjusted earnings of $0.80 beat the $0.71 expected, and adjusted operating margin of 14.0% beat the 12.7% brokers expected.
Down: the fiscal 2027 forecast of $3.15 to $3.25 roughly matched the $3.14 consensus and includes a 53rd week.
Down: International same-store sales rose 0.9% against about 3.3% expected, as Japan weakened.
Down: revenue of $9.14B missed the $9.2B expected, and full-year revenue of $37.9B missed $38B.

What it means for the stock: Confirmed that margin has recovered to about 14%, but the fiscal 2027 forecast holds it there, and sales growth leans more on spending per visit than on visits.