Starbucks stock surged after strong quarterly report, showing potential turnaround

From Nasdaq: 2024-08-01 11:17:00

The second quarter of 2024 earnings season is in full swing, with consumer discretionary stocks like Starbucks under the microscope. Starbucks (NASDAQ: SBUX) shares surged 6.5% after its stellar quarterly report, signaling a potential turnaround after a 35% decline from its high.

Despite only a 1% revenue increase year-over-year, Starbucks showed positive momentum with a 6% quarterly revenue growth. The key driver was their 33.8 million rewards membership users, growing by 7% annually. Starbucks’s pricing power and 27% gross margin rate set it apart in the retail sector.

While Starbucks reported a 6.1% decline in EPS, the stock rallied thanks to a $2.5 billion increase in free cash flow from the previous year. Management allocated $1.2 billion towards stock buybacks, removing 15 million shares from the market. Wall Street analysts are bullish on Starbucks with a $100 price target, anticipating a 31.8% upside potential.



Read more at Nasdaq:: Why Markets Boosted Starbucks Stock Post-Earnings