Starbucks Corp (NASDAQ:SBUX) shares are down on Friday following a mixed earnings report that highlighted both growth and challenges. Here’s what investors need to know.
Strong Revenue Growth Masks Earnings Miss
Starbucks reported revenues of $9.92 billion for the first quarter of fiscal 2026, surpassing analyst estimates of $9.63 billion, but adjusted earnings per share of 56 cents fell short of the expected 59 cents. The company noted a 6% year-over-year increase in consolidated net revenue, marking the first growth in U.S. comparable transactions in eight quarters.
In the North America segment, operating income decreased significantly to $867 million from $1.2 billion a year earlier, attributed to increased labor costs and tariffs. Meanwhile, comparable store sales rose 4% year-over-year in North America and 5% internationally, with a notable 7% increase in China.
The broader market is otherwise experiencing a slight pullback Friday, with major indices like the Nasdaq-100 down 0.36% and the Russell 2000 down 0.24%.
What Does Mixed Momentum Signal For Traders?
Starbucks is currently trading 0.8% above its 20-day simple moving average (SMA) and 7.7% above its 100-day SMA, indicating some short-term strength, while the stock is down 15.19% over the past 12 months. The shares are positioned closer to their 52-week lows than highs, reflecting a challenging year for the company.
The RSI is at 58.06, which is considered neutral territory, while the MACD is above its signal line, suggesting bullish momentum. The combination of neutral RSI and bullish MACD indicates mixed momentum, reflecting both potential and caution for traders.
- Key Resistance: $98.50
- Key Support: $82.50
Starbucks’ Business Model
Starbucks stands out as the world’s biggest and most recognizable coffee brand, powered by ultracustomizable beverages in-store and a sweeping footprint of nearly 41,000 cafes in over 80 countries.
About 52% are company-operated, with the balance run by licensees. The company operates roasteries and sells across its North America (74% of revenue as of the end of fiscal 2025), international (21%) and channel development (5%) segments.
The brand collects revenue from company-operated stores, licensee royalties, equipment and product sales, retail ready-to-drink beverages and packaged coffee.
Key Ratings Shaping Investor Sentiment
Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $101.29. Recent analyst moves include:
- BTIG: Buy (Maintains Target to $105.00) (Jan. 30)
- TD Cowen: Hold (Raises Target to $89.00) (Jan. 30)
- RBC Capital: Outperform (Maintains Target to $105.00) (Jan. 29)
Valuation Insight: While the stock trades at a premium P/E multiple, the strong consensus and 17% expected earnings growth suggest analysts view this growth as justification for the 8% upside to analyst targets.
Top ETF Exposure
- Capital Group Dividend Value ETF (NYSE:CGDV): 2.60% Weight
- State Street Consumer Discretionary Select Sector SPDR ETF (NYSE:XLY): 2.24% Weight
- The Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY): 2.23% Weight
Significance: Because SBUX carries significant weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
SBUX Shares Trade Flat Friday
SBUX Price Action: Starbucks shares are down 1.84% to $92.15 at the time of publication on Friday, according to Benzinga Pro data.
Image: Shutterstock
