Short Trade Idea
Enter your short position between $99.80 (an intermediate horizontal support level) and $101.20 (the lower band of its horizontal resistance zone).
Market Index Analysis
Starbucks (SBUX) is a member of the NASDAQ 100 Index, the S&P 100 Index, and the S&P 500 Index.
All three indices trade inside bearish chart patterns with decreasing bullish trading volumes.
The Bull Bear Power Indicator of the S&P 500 Index is bearish with a descending trendline.
Market Sentiment Analysis
Equity futures are modestly higher this morning as markets digest the ongoing news flow from Iran. On the oil front, the US claimed it destroyed numerous Iranian ships, including 16 mine-laying vessels, while one Greek oil tanker exited the Strait of Hormuz with its signal turned off. The International Energy Agency is proposing a record release of oil to counter prices. Today will also see the release of February’s CPI data, while markets await tomorrow’s earnings from Adobe and Dollar Tree, after Oracle beat expectations and raised its outlook.
Starbucks Fundamental Analysis
Starbucks is the world’s largest coffeehouse chain. Many credit it with launching the second wave of the global coffee culture. The company serves customers in 80 countries from over 35,700 stores.
So, why am I bearish on SBUX despite its post-earnings advance?
Starbucks reported mixed earnings, and I remain bearish amid persistent US consumer traffic and sluggish transaction growth. SBUX also faces ongoing margin pressures due to labor and restructuring costs. At the same time, competition from US rivals such as Dutch Bros., 7 Brew, and Scooter’s, and Chinese competitors including Luckin Coffee and countless tea houses is applying downside pressure on Starbucks, as evidenced by its 21% year-over-year plunge in international profitability.
Metric | Value | Verdict |
P/E Ratio | 83.97 | Bearish |
P/B Ratio | Unavailable | Bearish |
PEG Ratio | 1.66 | Bullish |
Current Ratio | 1.05 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
Starbucks Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 83.97 makes SBUX an expensive stock. By comparison, the P/E ratio for the S&P 500 Index is 26.80.
The average analyst price target for SBUX is $100.06, suggesting negligible upside potential with rising downside risks.
Starbucks Technical Analysis
Today’s SBUX Signal
Starbucks Price Chart
The SBUX D1 chart shows price action just below its horizontal resistance zone.
It also shows price action between its ascending 38.2% and 50.0% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator is bullish with a negative divergence.
The average bullish trading volumes are higher than the average bearish trading volumes, hinting at short-term volatility.
SBUX advanced as the S&P 500 Index corrected, a bullish confirmation, but bearish catalysts are rising.
My SBUX Short Stock Trade
SBUX Entry Level: Between $99.80 and $101.20
SBUX Take Profit: Between $77.99 and $82.02
SBUX Stop Loss: Between $107.97 and $111.20
Risk/Reward Ratio: 2.67
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