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 July 27 —reported its fiscal-Q3 results. Starbucks earned $1.01 per share on revenue of $7.5 billion. Both numbers topped estimates. Analysts expected the coffee giant to earn 77 cents per share on sales of $7.25 billion.
“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 strengthening track record of earnings growth, resulting in a mild 69 (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 just off new highs. Shares are forming a new flat base that shows a 126.42 buy point, according to IBD MarketSmith chart analysis.
According to the IBD Stock Checkup, Starbucks stock shows a modest 80 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 tracing a new flat base, so the stock is not a buy right now. Look for a strong move above the new buy point to indicate another time to buy shares.
Starbucks stock tumbled over 4% Wednesday, falling sharply below its key 50-day line.
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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