Starbucks (SBUX) is a roaster and retailer of specialty coffee globally. Besides its fresh, rich-brewed coffees, the company's offerings include many complimentary food items and a selection of premium teas and other beverages, sold mainly through its retail stores.

Analysts have taken their earnings expectations lower, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell).

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Image Source: Zacks Investment Research

In addition, the company is in the Zacks Retail – Restaurants industry, which is currently ranked in the bottom 37% of all Zacks industries. Let’s take a closer look at how the company currently stacks up.

Starbucks

Starbucks shares have faced a rocky road year-to-date, down 23% compared to the S&P 500’s impressive 7.3% gain. As shown below, shares nosedived post-earnings following its latest release, with worse-than-expected results weighing heavily.

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Image Source: Zacks Investment Research

Concerning headline figures in its latest release, the company fell short of the Zacks Consensus EPS estimate by 14% and posted sales 6.3% below expectations. Both items were down from the year-ago period, with sales of $8.5 billion down 2%.

Still, slowing business in China has remained a thorn in the company’s side, with China comparable store sales falling 11% on an 8% decline in average ticket. North American and U.S. comparable store sales also showed weakness, 3% lower, but saw a 4% increase in average ticket.

Below is a chart illustrating the company’s revenue on a quarterly basis.

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Image Source: Zacks Investment Research

Rachel Ruggeri, CFO, on the results: ‘“While it was a difficult quarter, we learned from our own underperformance and sharpened our focus with a comprehensive roadmap of well thought out actions making the path forward clear.”

Bottom Line

Analysts’ negative revisions rolled in following the release of its latest quarterly results, with slowing sales becoming a thorn in the company’s side.

Starbucks is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term.

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