Seattle-based Starbucks (SBUX) emerged as a coffeehouse giant in the 1990s with a meteoric rise, evolving from a local concept into a global brand. Amid the current stock market rally, is Starbucks stock a buy?
In the most recent quarter — reported on April 27 — Starbucks reported mixed fiscal Q2 results. Starbucks reported EPS of 62 cents on revenue of $6.7 billion. Wall Street expected Starbucks earnings per share to rise 66% to 53 cents. Revenue was seen growing 13% to $6.78 billion. In response, Starbucks stock tumbled more than 3%.
“We believe that many of our customers have adapted to their work- or study-from-home realities,” CEO Kevin Johnson said on the Starbucks earnings call for Q1 in January.
In the process, Starbucks stock has rebounded. The chain has worked to steer more consumer orders through drive-thru, digital and curbside pickup. With more people working from home, group ordering has become more common.
Fundamentally, the company boasts a deteriorating track record of earnings growth, resulting in a 55 (out of a best-possible 99) EPS Rating. The EPS Rating measures a company’s current quarterly earnings and annual earnings growth.
Starbucks Stock Technical Analysis
During the coronavirus stock market crash, Starbucks shares fell nearly 50% off their 52-week high. Amid a dramatic recovery, Starbucks stock is trading about 6% off its 52-week high. Shares are tracing a flat base with a 119.08 buy point and are about 6% away from the new entry, according to IBD MarketSmith chart analysis.
According to the IBD Stock Checkup, Starbucks stock shows a mild 52 out of a perfect 99 IBD Composite Rating. The Composite Rating helps investors easily measure a stock’s fundamental and technical metrics.
Is Starbucks Stock A Buy Right Now?
Starbucks is approaching a 119.08 buy point in a new flat base, so the stock is not a buy right now. If the stock breaks out in big volume, then it could be a potential buying opportunity. However, a lack of strong fundamentals could be a deterrent to growth investors.
Starbucks stock rose 0.5% Friday and is trading just below its 50-day moving average.
For more leading stocks and stocks approaching buy points, check out these IBD Stock Lists, like the Stocks Near A Buy Zone. To see the current stock market trend, check out IBD’s signature daily analysis, The Big Picture.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on stock market analysis and insight.
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