Trump's Energy Agenda, Skyrocketing Coffee Prices, Davos Highlights, And Powell's Wait-And-See Approach: This Week In Economics
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 26 2025
0mins
Should l Buy SBUX?
Source: Benzinga
Trump's Energy Policies: President Trump has declared a national energy emergency, emphasizing fossil fuel production and plans to revoke the electric vehicle mandate, which may significantly impact companies like Baker Hughes and Gulfport Energy.
Market Reactions: Netflix has raised its streaming prices by 16% amid inflation concerns, while soaring coffee prices could squeeze Starbucks' margins, and Jerome Powell indicates that interest rates will likely remain unchanged for now.
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Analyst Views on SBUX
Wall Street analysts forecast SBUX stock price to fall
21 Analyst Rating
12 Buy
7 Hold
2 Sell
Moderate Buy
Current: 98.360
Low
59.00
Averages
96.12
High
115.00
Current: 98.360
Low
59.00
Averages
96.12
High
115.00
About SBUX
Starbucks Corporations is a roaster, marketer, and retailer of specialty coffee globally. Its North America segment includes the United States and Canada. Its International segment includes China, Japan, Asia Pacific, Europe, Middle East and Africa, Latin America, and the Caribbean. Its North America and International segments include both Company-operated and licensed stores. The Channel Development segment includes roasted whole bean and ground coffees, Starbucks-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino and Starbucks Doubleshot, foodservice products, and other branded products sold outside the Company-operated and licensed stores. A large portion of its Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestle, while its global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Co., Ltd., Arla Foods amba, Nestle, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Starbucks Expects 73% EPS Growth by 2028
- Optimistic Earnings Forecast: Starbucks' leadership anticipates adjusted earnings per share (EPS) to reach between $3.35 and $4.00 by fiscal 2028, reflecting a 73% increase from $2.13 in fiscal 2025, indicating efforts to reverse a 28% decline in EPS over the past three years.
- Ongoing Operational Challenges: Despite a 3% increase in comparable transactions globally in Q1 of fiscal 2026, Starbucks continues to face intense industry competition and operational volatility due to consumer dissatisfaction with service quality, impacting its market performance.
- Strategic Investments and Innovations: The company is revamping its loyalty program, focusing on menu innovation, and investing in labor and technology to streamline store operations, aiming to enhance customer experience and drive long-term growth.
- Significant Valuation Pressure: Currently trading at 46 times its fiscal 2025 adjusted EPS, Starbucks' stock must maintain this valuation for the anticipated 73% EPS growth to translate into favorable returns, raising concerns about potential market reactions to its high valuation amidst uncertain economic conditions.
See More
CNBC Investing Club April Meeting Highlights
- Market Rebound Analysis: The S&P 500 index reached a record high in April, marking a significant recovery from the Iran war sell-off, indicating a renewed focus on company fundamentals despite the ongoing conflict, which underscores the importance of investor calmness.
- Nike Investment Reflection: Despite insider buying signals prompting us to increase our stake in Nike last December, we are now skeptical about CEO Elliott Hill's ability to turn the company around, and if next quarter's performance is disappointing, we will consider exiting.
- Amazon Cloud Business Recovery: Amazon's stock rebound highlights the importance of patience, as the market is gradually recognizing the strength of its AWS cloud division and online retail business, which are expected to continue growing in the future.
- Nvidia Market Leadership: Nvidia's leading position in the AI chip sector is paying off, and despite competitive pressures, its advantage in computing power positions it well to maintain market leadership going forward.
See More
McDonald's Expands Beverage Options, Poses Challenge to Dutch Bros
- Increased Market Competition: McDonald's has confirmed the rollout of handcrafted sodas and refreshers next month, with flavored energy drinks to follow in summer, posing a potential threat to Dutch Bros, which has built its reputation on creative beverages popular among younger consumers.
- Dutch Bros' Growth Journey: Founded 34 years ago, Dutch Bros now operates over 1,000 locations across nearly half of U.S. states, with coffee accounting for about 50% of sales and its proprietary Blue Rebel energy drinks making up 25%, showcasing its strong growth potential in the beverage market.
- McDonald's Market Strategy: McDonald's previously launched the CosMc's concept in Illinois focusing on artisan beverages, and although it closed some locations early on, its strategy to test premium drinks nationwide indicates a serious commitment to the beverage market, which could further impact Dutch Bros' market share.
- Dutch Bros Financial Performance: Despite a generally positive market, Dutch Bros' stock has declined 6% this week, reflecting investor concerns about future growth under pressure from larger competitors like McDonald's, even as it reported a 29% revenue increase and a 7.7% rise in same-store sales in its latest quarter.
See More
Starbucks' Optimistic Future Earnings Forecast
- Earnings Growth Outlook: Starbucks management anticipates adjusted earnings per share (EPS) to reach between $3.35 and $4.00 by fiscal 2028, representing a 73% increase from $2.13 in fiscal 2025, indicating significant profit growth potential that could attract investor interest.
- Operational Challenges and Recovery: Despite a 28% decline in adjusted EPS over the past three years, Starbucks reported a 3% increase in comparable transactions globally in Q1 of fiscal 2026, reflecting its proactive turnaround efforts in loyalty programs, menu innovation, and technology investments aimed at enhancing customer experience.
- Market Competition Pressure: Starbucks faces intense industry competition, with consumer dissatisfaction stemming from declining service quality, long wait times, and a complex menu adversely affecting same-store sales, indicating that future profit growth must overcome these challenges.
- Valuation Risks: Currently, Starbucks trades at a 46 times multiple of its fiscal 2025 adjusted EPS, and even if EPS grows by 73% over the next three years, the stock's return could still be uncertain if the valuation remains constant, prompting investors to carefully assess the associated risks.
See More
PepsiCo Reports Strong Q1 Earnings Exceeding Expectations
- Earnings Beat: PepsiCo reported an adjusted earnings per share of $1.61 for Q1, surpassing the $1.55 expected by analysts, with net income reaching $2.33 billion, indicating enhanced profitability.
- Revenue Growth: The company achieved total revenue of $19.44 billion, an 8.5% increase, primarily driven by the acquisition of Poppi and the new distribution of Alani Nu energy drink, showcasing the effectiveness of its market expansion strategies.
- North American Food Recovery: After over two years of decline, Pepsi's North American food business saw a 2% volume growth for the first time, reflecting the success of its price reduction strategy, particularly for brands like Lay's and Doritos.
- Future Outlook: Pepsi reiterated its full-year organic revenue growth forecast of 2% to 4% and core earnings per share growth of 4% to 6%, despite increased uncertainty in the global economy due to geopolitical conflicts, demonstrating a cautiously optimistic outlook for the future.
See More
Starbucks Launches Beta ChatGPT App for Custom Drink Orders
- AI Application Innovation: Starbucks has launched a beta version of an app within ChatGPT that allows customers to easily find and customize their drink orders using generative AI, enhancing user experience and attracting more young consumers.
- Personalized Ordering Experience: Customers can simply type '@Starbucks' in ChatGPT's directory to receive tailored drink suggestions, and while purchases must still be finalized through the Starbucks app or website, this feature strengthens brand engagement with customers.
- Market Strategy Adjustment: This update is part of Starbucks' 'Back to Starbucks' strategy aimed at attracting more customers across the U.S. by introducing trending beverages and curated menus, particularly targeting Gen Z's preference for unique and customizable options.
- Signs of Sales Growth: Following the app's launch, Starbucks has noticed an uptick in customer visits, indicating that this AI integration strategy may be improving sales performance and enhancing customer loyalty.
See More
Starbucks Expects 73% EPS Growth by 2028
- Optimistic Earnings Forecast: Starbucks' leadership anticipates adjusted earnings per share (EPS) to reach between $3.35 and $4.00 by fiscal 2028, reflecting a 73% increase from $2.13 in fiscal 2025, indicating efforts to reverse a 28% decline in EPS over the past three years.
- Ongoing Operational Challenges: Despite a 3% increase in comparable transactions globally in Q1 of fiscal 2026, Starbucks continues to face intense industry competition and operational volatility due to consumer dissatisfaction with service quality, impacting its market performance.
- Strategic Investments and Innovations: The company is revamping its loyalty program, focusing on menu innovation, and investing in labor and technology to streamline store operations, aiming to enhance customer experience and drive long-term growth.
- Significant Valuation Pressure: Currently trading at 46 times its fiscal 2025 adjusted EPS, Starbucks' stock must maintain this valuation for the anticipated 73% EPS growth to translate into favorable returns, raising concerns about potential market reactions to its high valuation amidst uncertain economic conditions.
See More
CNBC Investing Club April Meeting Highlights
- Market Rebound Analysis: The S&P 500 index reached a record high in April, marking a significant recovery from the Iran war sell-off, indicating a renewed focus on company fundamentals despite the ongoing conflict, which underscores the importance of investor calmness.
- Nike Investment Reflection: Despite insider buying signals prompting us to increase our stake in Nike last December, we are now skeptical about CEO Elliott Hill's ability to turn the company around, and if next quarter's performance is disappointing, we will consider exiting.
- Amazon Cloud Business Recovery: Amazon's stock rebound highlights the importance of patience, as the market is gradually recognizing the strength of its AWS cloud division and online retail business, which are expected to continue growing in the future.
- Nvidia Market Leadership: Nvidia's leading position in the AI chip sector is paying off, and despite competitive pressures, its advantage in computing power positions it well to maintain market leadership going forward.
See More
McDonald's Expands Beverage Options, Poses Challenge to Dutch Bros
- Increased Market Competition: McDonald's has confirmed the rollout of handcrafted sodas and refreshers next month, with flavored energy drinks to follow in summer, posing a potential threat to Dutch Bros, which has built its reputation on creative beverages popular among younger consumers.
- Dutch Bros' Growth Journey: Founded 34 years ago, Dutch Bros now operates over 1,000 locations across nearly half of U.S. states, with coffee accounting for about 50% of sales and its proprietary Blue Rebel energy drinks making up 25%, showcasing its strong growth potential in the beverage market.
- McDonald's Market Strategy: McDonald's previously launched the CosMc's concept in Illinois focusing on artisan beverages, and although it closed some locations early on, its strategy to test premium drinks nationwide indicates a serious commitment to the beverage market, which could further impact Dutch Bros' market share.
- Dutch Bros Financial Performance: Despite a generally positive market, Dutch Bros' stock has declined 6% this week, reflecting investor concerns about future growth under pressure from larger competitors like McDonald's, even as it reported a 29% revenue increase and a 7.7% rise in same-store sales in its latest quarter.
See More
Starbucks' Optimistic Future Earnings Forecast
- Earnings Growth Outlook: Starbucks management anticipates adjusted earnings per share (EPS) to reach between $3.35 and $4.00 by fiscal 2028, representing a 73% increase from $2.13 in fiscal 2025, indicating significant profit growth potential that could attract investor interest.
- Operational Challenges and Recovery: Despite a 28% decline in adjusted EPS over the past three years, Starbucks reported a 3% increase in comparable transactions globally in Q1 of fiscal 2026, reflecting its proactive turnaround efforts in loyalty programs, menu innovation, and technology investments aimed at enhancing customer experience.
- Market Competition Pressure: Starbucks faces intense industry competition, with consumer dissatisfaction stemming from declining service quality, long wait times, and a complex menu adversely affecting same-store sales, indicating that future profit growth must overcome these challenges.
- Valuation Risks: Currently, Starbucks trades at a 46 times multiple of its fiscal 2025 adjusted EPS, and even if EPS grows by 73% over the next three years, the stock's return could still be uncertain if the valuation remains constant, prompting investors to carefully assess the associated risks.
See More
PepsiCo Reports Strong Q1 Earnings Exceeding Expectations
- Earnings Beat: PepsiCo reported an adjusted earnings per share of $1.61 for Q1, surpassing the $1.55 expected by analysts, with net income reaching $2.33 billion, indicating enhanced profitability.
- Revenue Growth: The company achieved total revenue of $19.44 billion, an 8.5% increase, primarily driven by the acquisition of Poppi and the new distribution of Alani Nu energy drink, showcasing the effectiveness of its market expansion strategies.
- North American Food Recovery: After over two years of decline, Pepsi's North American food business saw a 2% volume growth for the first time, reflecting the success of its price reduction strategy, particularly for brands like Lay's and Doritos.
- Future Outlook: Pepsi reiterated its full-year organic revenue growth forecast of 2% to 4% and core earnings per share growth of 4% to 6%, despite increased uncertainty in the global economy due to geopolitical conflicts, demonstrating a cautiously optimistic outlook for the future.
See More
Starbucks Launches Beta ChatGPT App for Custom Drink Orders
- AI Application Innovation: Starbucks has launched a beta version of an app within ChatGPT that allows customers to easily find and customize their drink orders using generative AI, enhancing user experience and attracting more young consumers.
- Personalized Ordering Experience: Customers can simply type '@Starbucks' in ChatGPT's directory to receive tailored drink suggestions, and while purchases must still be finalized through the Starbucks app or website, this feature strengthens brand engagement with customers.
- Market Strategy Adjustment: This update is part of Starbucks' 'Back to Starbucks' strategy aimed at attracting more customers across the U.S. by introducing trending beverages and curated menus, particularly targeting Gen Z's preference for unique and customizable options.
- Signs of Sales Growth: Following the app's launch, Starbucks has noticed an uptick in customer visits, indicating that this AI integration strategy may be improving sales performance and enhancing customer loyalty.
See More
