Starbucks Stock Falls 19% in 6 Months: Time to Buy or Stay Away?

Starbucks Corporation SBUX shares have declined 18.6% over the past six months, compared to a 6% decrease in the industry. In the same time frame, the S&P 500 has risen 7.4%.

At the same time frame, Starbucks has underperformed other industry players, such as McDonald's Corporation MCD, Chipotle Mexican Grill, Inc. CMG, and Domino's Pizza, Inc. DPZ.

Price Performance

SBUX’s Estimate Revision Trend

The Zacks Consensus Estimate for SBUX's 2025 and 2026 EPS moved down in the last 30 days, indicating negative sentiment among analysts for the company's earnings. The Zacks Consensus Estimate for 2025 and 2026 EPS has moved down 11.2% and 6.8%, respectively, in the past 30 days.

Meanwhile, McDonald's, Chipotle and Domino's earnings in 2025 are likely to witness year-over-year growth of 5.3%, 8% and 6.1%, respectively.

A Look at Starbucks’ Valuation

The SBUX stock is trading above the industry. With a forward 12-month price/earnings ratio of 33.99X, it exceeds the industry average. SBUX is also trading above other industry players like McDonald's, Chipotle and Domino's.

Factors Hurting SBUX

The company continues to face pressure in its core U.S. market, where comparable sales slipped 2% in the third quarter of fiscal 2025 with transaction volumes down nearly 4%. This weakness underscores that the domestic turnaround is still in its early stages, and competition plus macroeconomic headwinds continue to weigh on performance.

In third-quarter fiscal 2025, the operating margin contracted sharply by 660 basis points year over year to 10.1%. Heavy investments in labor hours, store transformation initiatives, and leadership programs are weighing on profitability, with earnings per share falling 45% year over year.

Much of Starbucks’ recovery hinges on the success of Green Apron Service, menu simplification, and future innovations. While pilots are encouraging, large-scale rollouts carry execution risks, particularly given the complexity of operations and competitive pressures.

Then again, management acknowledged challenges from competitors and elevated unit saturation in the United States. Although value perceptions have recently improved, maintaining affordability without relying on discounts remains a balancing act, especially for a premium brand in a cautious consumer environment.

While Starbucks did not issue formal guidance, management conveyed a conservative outlook for the fourth quarter of fiscal 2025. Executives acknowledged the unpredictable consumer environment and the uncertain mix of ticket and transaction growth. Although transactions are improving, the net effect on fourth-quarter fiscal 2025 comps remains unclear. The company is focused on scaling its “Green Apron Service” operating model and foundational changes, which are expected to gain traction through fiscal 2026.

What May Bring the Stock Back on Track?

Starbucks’ international business delivered record revenues, with China returning to positive comparable sales and transaction growth. Markets like the U.K., Mexico, and Turkey also showed healthy momentum, highlighting the company’s diversified growth drivers outside the United States.

The rollout of initiatives under the “Back to Starbucks” plan is showing encouraging signs. Partner engagement is higher, service times in drive-thru and mobile orders have improved, and customer satisfaction metrics such as value perception and complaint reduction are trending positively.

Starbucks continues to benefit from its strong digital presence. With nearly 34 million active reward members and one of the largest social communities in the industry, the company is positioned to deepen customer engagement through planned loyalty program enhancements in 2026.

Moreover, Starbucks is preparing a wave of product innovation for 2026, including protein-enhanced beverages, a reimagined bakery lineup, and more experiential drinks. Its “Starting 5” process, which involves baristas in product development, is expected to ensure smoother execution and customer appeal.

End Notes

Starbucks is in the middle of a turnaround that has yet to deliver meaningful results, making its stock unattractive for now. The company’s U.S. business remains under pressure, with sluggish traffic, rising competition and operational challenges weighing heavily on performance. 

Profitability has deteriorated as management pours resources into labor and store transformation, but the payoff from these investments is uncertain and dependent on flawless execution. While international markets and digital engagement provide some bright spots, the domestic business is the core driver, and its recovery appears slow and vulnerable to economic headwinds. With elevated valuation levels compared with peers and a lack of near-term clarity, investors may be better off staying on the sidelines until signs of a sustainable rebound emerge. Starbucks currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research