Starbucks Stock Analysis

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Starbucks Stock Analysis

Can Starbucks Stock Outperform S&P 500?

Starbucks is a name that doesn't need any introduction. Back in 2021, Starbucks' stock price reached a new all-time high. Also, the 3-year bull run that led to this rally shows the stock price went up by 145%.

So, the Starbucks stock easily outperformed the broader S&P 500 index by a long shot. But since then, things have turned a little difficult for Starbucks because of operational challenges.

Starbucks Forecasts $4.00 EPS In FY 2028

Today, the Starbucks stock is trading around 22% lower than its all-time high. However, multiple factors show that Starbucks is on a path to outperform the S&P 500 in the next 3 years.

The Starbucks management shared a forecast that the EPS will be $3.35 - $4.00 in FY 2028. In FY 2025, the EPS was $2.13, which shows the management is anticipating a 73% growth in earnings.

Also, Starbucks is making a lot of progress when it comes to its turnaround efforts. The data shows a 3% increase in comparable transactions during Q1 of FY 2026.

Starbucks has also changed its loyalty program and is now focusing more on menu innovation. Last but not least, Starbucks is also investing heavily in technology and labor to streamline the store operations.

So, if Starbucks can manage to achieve its forecasted EPS, it would have no trouble beating the S&P 500 index. But, it is worth noting that it is just a forecast and there is no guarantee that it will happen with a 100% certainty.

Some of the things that could stop Starbucks from achieving this EPS are consumer behavior, industry trends, and the overall inflation situation.

Last but not least, the Starbucks valuation is still a little high. With all things considered, Starbucks is not the ideal stock for risk-averse investors.

Because if Starbucks fails to achieve the forecasted EPS, the stock price will fall! And the speed of the decline will be a little higher as the stock is already overpriced.

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