Starbucks Is on Track to Beat the Nasdaq-100 for the First Time Since 2022. Is There More Room to Run?

Starbucks reports encouraging traffic: global comparable transactions are up for a second straight quarter and US transactions grew across all day parts. The company raised full-year adjusted EPS guidance to $2.25–$2.45 (≈10% YoY at the midpoint) while targeting 5% revenue growth by fiscal 2028, even as fiscal 2026 revenue is expected to be flat. Despite the rebound in transactions and a record 35.6M US rewards members, the stock is flagged as expensive (forward P/E 35.6) with macro demand risk; shares are up 24% YTD through July 21.

Analysis

The market is rewarding the first sign of execution repair, but the more important question is whether this becomes durable unit growth or just a cleaner-looking margin story. At this valuation, the stock needs both; cost discipline alone can support EPS for a while, yet it does little to justify sustained multiple expansion if revenue stays lethargic.

The second-order read-through is more interesting for competitors than for Starbucks itself. A genuinely improving Starbucks would pressure smaller premium coffee chains and local independents by re-raising the bar on convenience and consistency, while any renewed discounting to keep traffic up would mostly tax category economics and leave the winner as the consumer, not the equity holder. That argues for relative-value exposure rather than an outright chase.

The key risk is that transaction recovery proves to be a short-cycle response to promotions and service fixes, not a step-up in willingness to pay. If the next 1-2 quarters do not show top-line acceleration, the multiple can compress quickly because the market is already pricing a smooth turnaround; the structural upside only matters over 6-18 months if same-store sales reaccelerate and the company can grow without buying volume.

Key Decisions for Investors

• Do not initiate a fresh outright long in SBUX here; if already positioned, trim on strength and/or buy 3-6 month downside protection 5%-10% below spot. Risk/reward is poor if comp momentum stalls and the multiple de-rates.
• Relative-value trade: short SBUX / long MCD over the next 2-3 months if you expect the market to reward steadier traffic and less turnaround risk. The thesis fails if Starbucks converts transactions into positive revenue inflection by the next earnings print.
• Set an alert on the next quarterly comp and revenue mix: if transactions remain positive but average ticket and total revenue do not inflect, use any post-earnings pop to sell covered calls or reduce exposure.
• For investors wanting category exposure, prefer a basket approach (XLY or a restaurant basket) over single-name SBUX until there is proof that traffic improvement is translating into sales growth. This reduces execution risk while keeping upside to consumer demand.