If you’ve visited a Starbucks (SBUX +1.01%) location recently, you might have noticed some changes. The company has made major efforts to renovate stores and reach customers in new ways since Brian Nicoll took over as CEO about a year and a half ago. There was noticeable progress in the 2026 fiscal first quarter (ended Dec. 28), and the market is responding: Starbucks stock is up 18% year to date, while the S&P 500 is up 4%.
With the company scheduled to report second-quarter earnings on April 28, is now the time to buy?
Image source: Starbucks.
A venti-size comeback
Starbucks has had troubles for several years now as customer behaviors have changed. Its high prices, long waits, and old stores have enabled smaller, cheaper, and more agile coffee chains to wedge themselves into open spaces and capture market share.
Over the past several years, the company has made broad attempts to overhaul its business and stage a comeback, with muted success. Niccol’s tenure has been received with enthusiasm, and there were tangible signs of progress in the first quarter. Comparable-store sales (comps) growth accelerated to 4%, and U.S. transaction growth was positive for the first time in eight quarters.
Niccol said that recovery is happening ahead of schedule, even though profits are still pressured: Operating margin was only 10.1% in the quarter, down from 11.9% last year, which itself was a decline. But Niccol says it’s going according to plan. “First, turn around the top line, and then earnings growth will follow,” he said.
Today’s Change
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What to expect on April 28
Starbucks is expected to release second-quarter earnings on April 28. Management did not provide second-quarter guidance, but it provided the following full-year outlook:
- Comps to increase by at least 3%, and total revenue to increase at a similar rate.
- Adjusted operating margin to “slightly improve” over last year.
- Adjusted earnings per share (EPS) to be between $2.15 and $2.40.
- 600 to 650 net new stores to open.
It added that so far in January, when the report was given, comps growth was increasing as expected.
For the second quarter, Wall Street is looking for $9.3 billion in sales, or a 5.4% increase, and $0.43 in EPS, up from $0.41 last year.
It seems likely that Starbucks will meet expectations in the quarter, considering its recent progress and in-quarter update. The stock is likely to jump if it does, but that doesn’t mean Starbucks is an excellent stock to buy today. It’s trading at a P/E ratio of 82, which is a hefty premium for a company not growing all that fast.
The question is really whether Starbucks is a buy at the current price, and the answer, in my opinion, is that you’ll find better buys elsewhere. As a long-term value stock, though, Starbucks fits the bill. It pays a growing dividend that yields 2.5% at the current price.
