Home Stock Is it time to sell Starbucks shares as comparable sales fall short of estimates?

Is it time to sell Starbucks shares as comparable sales fall short of estimates?

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On Friday, Starbucks Corp (NASDAQ:SBUX) shares plunged more than 7% after comparable sales missed the consensus for analyst expectations. The company announced its most recent quarterly results Thursday after markets closed, beating FQ4 earnings estimates.

The company posted FQ4 non-GAAP earnings per share of $1.00, in line with expectations, while its GAAP EPS of $1.49 was $0.51 ahead of estimates. On the other hand, revenue for the quarter increased by 31.5% from the same quarter last year to $8.15 billion, missing the Street forecast by $70 million.

Starbucks’ long-term growth

From an investment perspective, Starbucks shares trade at trailing 12-month and forward P/E ratios of 43.98 and 26.43, respectively. Therefore, value investors could opt for alternatives in the market.

However, the company offers exciting long-term growth prospects, making it an interesting option for growth investors. 

Although analysts predict earnings will fall by more than 73% this year, they also expect the company’s bottom line to grow at an average annual rate of 54.62% over the next five years.

Source – TradingView

Technically, Starbucks shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has plummeted closer to the oversold conditions of the 14-day RSI.

Therefore, investors could target potential rebounds at about $109.59, or higher at $114.59. On the other hand, if the stock continues to fall, it could find support at $99.98, or lower at $95.14.

It could be time to buy SBUX shares

In summary, Starbucks shares have swung to a net gain of just 1.86% this year, thus substantially underperforming the S&P 500 Index, which is up more than 23%. 

In addition, the stock seems to have pulled back closer to oversold conditions, creating a perfect opportunity for a rebound. 

Therefore, given the company’s exciting long-term growth prospects, it could be time to buy before the stock advances further.

The post Is it time to sell Starbucks shares as comparable sales fall short of estimates? appeared first on Invezz.

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