Starbucks Stock Has Fallen 13% in a Month, but the Turnaround Numbers Keep Improving

Key Stats for Starbucks Stock

• 52-Week Range: $78 to $111
• Market Cap: around $108 billion
• Street Mean Target: around $112
• Forward 2-Year Revenue Growth (CAGR): around 2%
• Forward 2-Year EPS Growth (CAGR): around 21%
• NTM P/E: around 32x
• NTM EV/EBITDA: around 20x
• LTM Gross Margin: 22.3%
• Dividend Yield: 2.7%

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Why Starbucks Is Closing 250 Stores While Sales Rebound

Starbucks is closing about 250 stores in the U.S. and Canada this week, roughly 1% of its North American base, even as its results improve.

Fiscal third-quarter comparable sales rose 7.9%, with transactions up 4.2%, and non-GAAP operating margin reached 14.4%, up 430 basis points from a year earlier.

GAAP earnings per share of $0.91 rose 86%, and management now guides full-year non-GAAP EPS to $2.55 to $2.65.

Reported revenue slipped 1% to $9.3 billion because the China stores moved to a licensed joint venture, so comparable sales are the cleaner read. COO Mike Grams said the closures target locations where Starbucks doesn’t “see a path to acceptable financial performance.”

Dutch Bros is heading the other way, with second-quarter revenue up 32.5%, systemwide same-shop sales up 5.8%, and at least 185 new shops planned this year.

The pullback in Starbucks (SBUX) shares looks sector-wide, since Chipotle and Yum Brands fell 16% and 11% over the same month. To see whether the improvement reaches cash, the chart below shows cash from operations, the money the business generates before spending on stores and equipment.

Cash from operations fell to $4.7 billion in fiscal 2025 from $6.1 billion the year before, and estimates call for a recovery to around $5.6 billion this year and around $8 billion by fiscal 2029.

Last year’s cash flow still covered a dividend bill of roughly $3 billion, although the payout ratio sits at 142% of trailing earnings and net debt stands near $19 billion, or 2.1 times EBITDA.

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How Much of the Comeback Is Already in the Price

Investors are paying around 32 times forward earnings, and the Street’s mean target of around $112 sits about 18% above the stock.

Analysts expect EPS to grow around 21% a year over the next two years on revenue growth of only around 2%, so the earnings story rests on margins. The shares also trade at around 29 times next-twelve-month free cash flow.

TIKR’s valuation model, shown below, goes further, with a mid case of around $160 by the end of fiscal 2030, which works out to about 69% in total or roughly 14% a year. The stock lost about 4% a year over the past five years, so the model is projecting a sharp change.

The mid case assumes revenue growth of around 5% and a net margin near 11%, compared with about 6% over the past five years and above 12% over the past decade, so it requires profitability to keep rebuilding. Even the low case, which runs to 2034, returns around 7% a year, while the high case reaches around 13%.

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Should You Buy SBUX Stock?

The bull case is that traffic is growing again, with comparable sales up 7.9% and full-year operating margin guided above 11%, while a 2.7% dividend yield pays investors as cash flow rebuilds.

The bear case is that a stock at around 32 times forward earnings leaves little room for a stumble, with fewer stores and revenue guided flat to slightly higher, while the payout ratio already exceeds 100% of earnings. Comparable sales are the number to watch when Starbucks reports in late October.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!