Starbucks Stock Gains 27% YTD: Should You Buy, Sell or Hold?

Shares of Starbucks Corporation SBUX have gained 27.2% so far this year against the Zacks Retail – Restaurants industry’s 0.7% dip. During the same period, SBUX also outperformed key restaurant peers, including Dutch Bros Inc. BROS, First Watch Restaurant Group, Inc. FWRG and McDonald’s Corporation MCD, which declined 18.5%, 13.6% and 11.3%, respectively.

Investor sentiment surrounding Starbucks has strengthened as the company’s Back to Starbucks turnaround continues to gain traction. Improved service execution, stronger product availability and rising brand engagement have supported traffic momentum, while early results from coffeehouse uplifts indicate transaction gains across formats and dayparts.

The recovery is also beginning to translate into better profitability and a stronger earnings outlook, reinforcing confidence in the sustainability of the turnaround. Starbucks’ shift toward a more capital-efficient international licensing model has likely supported the stock’s year-to-date momentum.

SBUX YTD Price Performance

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Currently, SBUX is trading 3.1% below its 52-week high of $110.51. So, should investors pour more capital into SBUX shares now? Let’s take a closer look.

Back to Starbucks Strategy Strengthens Traffic

Starbucks’ recent performance suggests that its turnaround initiatives are gaining traction. Green Apron Service has become the operating foundation of the company’s recovery strategy, supported by investments in staffing, operating routines, coaching and service standards. Starbucks achieved targeted service times across every access point during the fiscal third quarter despite transaction growth across dayparts. Food availability has also improved to nearly 99%, roughly 10 percentage points year over year.

There appears to be additional room for traffic growth. Starbucks indicated that transaction opportunities remain in both the morning and afternoon dayparts. Morning has produced the largest absolute transaction gains, while the company continues to build the afternoon business through beverage innovation, food offerings and better operating routines.

Brand engagement is strengthening as well. Brand affinity, consideration and purchase intent reached five-year highs during the quarter, while sales growth was broad-based across generations, income groups, Starbucks Rewards members and nonmembers. In the fiscal third quarter, Starbucks Rewards reached 35.8 million 90-day active U.S. members, with engagement and stored-value-card reload amounts exceeding the company’s expectations.

Margin Recovery Strengthens SBUX’s Earnings Outlook

The turnaround is beginning to translate into stronger profitability. In the fiscal third quarter, SBUX’s operating margin expanded approximately 430 basis points year over year to 14.4%, marking the second consecutive quarter of margin expansion. North America operating margin improved approximately 280 basis points, and excluding tariff refunds, the segment’s margin increased by more than 100 basis points. Stronger sales leverage, cost savings and operational improvements helped absorb investments in Green Apron Service and menu innovation.

The earnings recovery was equally notable. Fiscal third-quarter EPS increased approximately 70% year over year to 85 cents. Starbucks is also progressing toward its $2 billion gross cost-savings target through fiscal 2028, with savings expected across product and distribution costs, operating expenses and G&A.

Starbucks Raises FY26 Guidance

Improving operating trends prompted Starbucks to raise its fiscal 2026 outlook. The company now expects full-year U.S. comparable store sales growth slightly above 6%, compared with its previous forecast of at least 5%. Global comparable store sales growth is projected to approach 6%, up from the earlier expectation of at least 5%.

Starbucks also raised its full-year consolidated operating-margin outlook to more than 11%. The company raised its adjusted earnings guidance to $2.55-$2.65 per share from the prior range of $2.25-$2.45. Sales leverage, disciplined execution and continued cost savings are expected to support margin improvement, while coffee-price pressures should likely ease in the fiscal fourth quarter.

The Zacks Consensus Estimate for SBUX’s fiscal 2026 earnings per share has climbed from $2.41 to $2.58 in the past 60 days, signaling optimism about the company’s future.

SBUX Earnings Estimate Trend

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Store Uplifts and International Model Boost SBUX’s Prospects

Starbucks is also seeing encouraging results from its coffeehouse uplift program. The company surpassed 1,000 North American uplifts during the third quarter and raised its fiscal 2026 target to at least 1,500. Early results indicate transaction improvement across formats, access points, dayparts and customer segments. These upgrades require an average investment of roughly $150,000 and can be completed without taking stores offline, supporting attractive returns while enhancing the customer experience.

Internationally, Starbucks is becoming more capital-light. Following the transition of China to a joint-venture structure, roughly 90% of the company’s international portfolio is now operated through licensing arrangements. Starbucks views this structure as a capital-efficient way to expand the brand while maintaining financial discipline and working with local partners.

What May Pull Back SBUX Stock?

Despite the improving outlook, the turnaround is not complete. Starbucks continues to operate against an uncertain U.S. consumer backdrop, and the company expects tougher year-over-year traffic comparisons as it moves through the fourth quarter.

North American unit growth may also remain modest through fiscal 2027 as Starbucks evaluates underperforming locations and corrects past development decisions. The company acknowledged that some stores were placed in unsuitable locations or require economics that would be better addressed through replacement rather than remodeling.

Input costs remain a swing factor despite near-term relief. Starbucks said reciprocal tariff refunds largely offset related tariffs incurred during the first nine months, making the third-quarter cost rate less representative of underlying operations. Management identified the year-to-date product and distribution cost ratio of 32.3% as a better normalized measure. Coffee remained a cost drag, though its impact eased and is expected to become largely immaterial to year-over-year comparisons in the fiscal fourth quarter.

SBUX Stock Valuation & Technical Insights

Starbucks stock is currently trading at a premium. SBUX is currently trading at a forward 12-month price-to-sales (P/S) multiple of 3.09, below the industry average of 3.18. Other industry players, such as Dutch Bros, McDonald's and First Watch Restaurant, have P/E ratios of 3.52, 6.60 and 0.54, respectively.

SBUX’s P/S Ratio (Forward 12-Month) vs. Industry

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From a technical perspective, SBUX is currently trading above its 50-day moving average, indicating solid upward momentum and price stability.

SBUX Stock Trades Above 50-Day Moving Average

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Conclusion: Hold SBUX Stock for Now

Starbucks’ improving traffic trends, stronger execution under the Back to Starbucks strategy and accelerating margin recovery support a constructive fundamental outlook. Higher fiscal 2026 guidance, upward earnings estimate revisions, encouraging returns from coffeehouse uplifts and a more capital-efficient international structure further strengthen the company’s earnings-growth profile.

However, the stock’s 27.2% year-to-date rally and proximity to its 52-week high suggest that a meaningful portion of the turnaround is already reflected in the share price. An uncertain consumer environment, tougher traffic comparisons, modest near-term North American unit growth and lingering input-cost risks warrant caution. Against this backdrop, existing shareholders may prefer to retain SBUX stock, while new investors could wait for a more attractive entry point.

SBUX has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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