Company Overview - Starbucks Corporation (NASDAQ:SBUX) is a leading retailer of coffee, tea, and other beverages, as well as food products, operating through its stores and licensed outlets. The company's brands include Starbucks Coffee, Teavana, Seattle's Best Coffee, Ethos, and Starbucks Reserve [2]. Recent Performance - The company experienced a significant upside surprise in same-store sales, indicating strong performance compared to the previous year. This positive development is attributed to the leadership of CEO Brian Niccol, who took over in August 2024 with a focus on improving service speed to deliver coffee in four minutes or less [1]. Market Sentiment - Jim Cramer expressed a bullish outlook on Starbucks stock, highlighting that the Charitable Trust holds a "huge position" in it. Despite a subsequent pullback in stock price after the earnings report, the overall sentiment remains positive, suggesting that Wall Street is beginning to recognize the company's potential [1].

Core Viewpoint - Starbucks Corporation is facing challenges ahead of its fiscal first-quarter earnings announcement for 2025, with analysts projecting a decline in earnings per share (EPS) compared to the previous year [1][2]. Financial Performance - Analysts expect Starbucks to report a profit of $0.59 per share on a diluted basis, which represents a 14.5% decrease from $0.69 per share in the same quarter last year [2]. - For the current fiscal year, analysts project an EPS of $2.35, reflecting a 10.3% increase from $2.13 in fiscal 2025, with further growth anticipated to $3.02 in fiscal 2027, marking a 28.5% year-over-year increase [3]. Stock Performance - Starbucks' stock has decreased by 5.9% over the past year, underperforming the S&P 500 Index, which gained 14.8%, and the Consumer Discretionary Select Sector SPDR Fund, which rose by 4.6% during the same period [4]. - The company's share price has declined approximately 10-14%, attributed to operational, financial, and sentiment-related factors, while major indices have posted gains [5]. Operational Challenges - Starbucks is experiencing slowing comparable store sales and transaction declines, alongside rising labor and commodity costs, which are impacting profitability and near-term earnings expectations [6]. - The company is also dealing with the financial repercussions of its "Back to Starbucks" turnaround plan, which includes store closures and layoffs, further weighing on its operational performance [6].

Group 1 - Starbucks Corporation (NASDAQ:SBUX) is viewed as an "early-stage turnaround story" under the leadership of Brian Niccol, indicating a potential for recovery and growth [1] - The stock has been range-bound for several weeks but has recently rebounded from its lows, surpassing the 50-day moving average [1] Group 2 - Starbucks sells a variety of products including coffee, tea, beverages, and food items under several brands such as Starbucks Coffee, Teavana, and Seattle's Best Coffee [2]

Group 1: Company Challenges and Strategies - Starbucks has faced increasing challenges since Brian Niccol became CEO, with the ambitious "Return to Starbucks" plan struggling to revitalize growth due to unexpected changes in consumer behavior [2] - The company has seen a decline in customer traffic and same-store sales, with North American traffic expected to remain negative until 2026 [2][8] - Bernstein projects that Starbucks' investments in labor, estimated to reach $1.5 to $2 billion over two years, will lay the foundation for recovery [2] Group 2: Financial Performance - In Q2 of fiscal year 2025, Starbucks reported revenue of $8.76 billion, a 2.3% year-over-year increase, but below Wall Street's expectation of $8.82 billion [6] - Same-store sales fell by 1%, with a 4% decline in the U.S. market, while the Chinese market saw a 4% increase in transactions but a 4% drop in average ticket price [6] - Adjusted operating margin decreased by 460 basis points to 8.2%, and net profit dropped by 50.3% to $384.2 million, with earnings per share falling 50% to $0.34, missing analyst forecasts [6] Group 3: Analyst Expectations and Stock Performance - Bernstein maintains an "outperform" rating for Starbucks, raising the target price from $90 to $100, citing labor plan transparency and profit margin stability as catalysts for long-term growth [9] - Evercore ISI analyst David Palmer also raised the target price from $95 to $105, reflecting increased market confidence in Starbucks' ability to overcome current challenges [9] - The stock has risen 24% over the past 52 weeks and 9% in the last month, with an expected adjusted P/E ratio of 38 and a sales multiple of 2.9, both above industry averages [4][5]