How Is Starbucks’ Stock Performance Compared to Other Consumer Discretionary Stocks?

Based in Seattle, Washington, Starbucks Corporation (SBUX), with a market cap of $127.3 billion, operates as a roaster, marketer, and retailer of coffee worldwide. The company’s stores offer coffee, tea, and other beverages, roasted whole beans and ground coffees, single-serve products, ready-to-drink beverages, and various food products.

Companies valued at $10 billion or more are generally classified as “large-cap” stocks, and SBUX fits this criterion perfectly, exceeding the mark. As a globally recognized and leading beverage chain, SBUX capitalizes on rising consumer disposable income and maintains consistent revenue growth.

However, the leading coffee chain has fallen 4.9% from its 52-week high of $117.46, which it hit on March 3. Over the past three months, SBUX shares have grown 12.6%, outperforming The Consumer Discretionary Select Sector SPDR Fund (XLY), which declined 7.3% during the same period.

Moreover, in the longer term, SBUX shares have surged 22% over the past six months and 22.4% over the past 52 weeks. By contrast, XLY has surged 13% over the past six months and 17.3% over the past 52 weeks.

Despite fluctuations, SBUX has been trading well above its 50-day and 200-day moving averages since January.

Starbucks’ outperformance stems from a positively affected consumer spending behavior. With disposable personal income increasing by 0.9% in the month of January, consumers are more likely to spend on non-necessary products and services, leading to the company’s recent windfall.

On Jan. 29, the company’s stock surged 8.1% following its Q1 earnings release. SBUX announced net revenues of $9.4 billion and also reported opening 77 net new stores in the first quarter. Moreover, its EPS came in at $0.69, surpassing the Wall Street EPS estimates by 4.6%.

In the highly competitive restaurant industry, SBUX’s rival, McDonald's Corporation (MCD), has lagged behind, surging 6.8% over the past six months and climbing 5.1% over the past 52 weeks.

Moreover, Wall Street analysts remain moderately bullish on SBUX’s prospects. The stock holds a consensus “Moderate Buy” rating from the 31 analysts covering it. The stock currently trades above mean target of $107.34.