Leading coffeehouse chain Starbucks (SBUX 0.53%) was hurt by the pandemic when it temporarily shuttered its stores across the globe for health and safety reasons. As vaccination rates increased and the world started to open back up, consumer behavior normalized, and the business was back to posting solid growth. 

But Starbucks' shares haven't fully recovered. Although they're up 23% over the past six months, they're still down about 15% from their all-time high. Is it time for investors to buy? Grab your favorite caffeinated beverage and continue reading about this top restaurant stock. 

Disappointing Wall Street 

In the fiscal 2023 first quarter (ended Jan. 1), Starbucks was able to increase revenue 8.2% year over year to $8.7 billion. Diluted earnings per share (EPS) of $0.74 were up 7.2%. The figures showed strong top- and bottom-line gains, but they slightly missed Wall Street estimates. The stock was under pressure following the news. 

Same-store sales, otherwise known as comps, measure revenue for locations that are open 13 months or longer. On a global level, comps rose 5% thanks to a higher average transaction size. 

Once again, however, shareholders must be aware of the tale of two markets when it comes to Starbucks' business. In the U.S. -- the company's largest market with 15,952 stores -- comps increased 10%. Even more impressive is the fact transaction counts were up 1% year over year, a bright spot given the 2% decline in company-wide transaction comps.

But China, Starbucks' fastest-growing region, was decimated by COVID lockdowns. And when restrictions eased, cases of the disease started spiking. Comps in that country, where there are currently 6,090 Starbucks stores, were down 29% in the quarter.

Interim CEO Howard Schultz said on the earnings call that he expects the company's China business to recover in the back half of fiscal 2023.

Another bright spot for the latest quarter was Starbucks' digital strength. The business now has 30.4 million 90-day active rewards members in the U.S., up 15% year over year. And customers loaded their accounts with $3.3 billion of funds during the fiscal first quarter, demonstrating how powerful the brand still is. 

Despite macroeconomic headwinds and inflation, the leadership team reiterated its fiscal 2023 financial targets of 11% revenue growth (at the midpoint) and adjusted EPS growth of at least 15%.

Consider the valuation 

With the stock up 23% in the previous six months and 96% in the past five years, shares now trade at a price-to-earnings (P/E) ratio of 37. While this is a lower than the average multiple of the past three-, five-, and 10-year periods, it's expensive nonetheless. By comparison, the S&P 500's P/E is just under 20 right now. 

On every earnings release, management points out that keys to the company's long-term outlook are new store openings, comps gains, and improved operating margins.

With the physical footprint, executives believe that the business can have 55,000 locations by 2030, compared to 36,170 today.

Comps growth has averaged about 4% from fiscal 2018 through fiscal 2022, which includes a pandemic-fueled 14% drop in fiscal 2020. If this kind of trend continues, it'll be a good sign for the company. And lastly, Starbucks' operating margin could creep up over time given improved operational efficiencies.

Wall Street seems to be very optimistic about the business. Consensus analyst estimates call for revenue to increase at a compound annual rate of 11.4% between fiscal 2022 and fiscal 2027. And earnings per share are expected to grow at an average pace of 19.5% per year during the same period.

If you have high confidence the company can meet or exceed these financial targets, then paying a P/E of 37 might be worth it for you. On the other hand, if you think this outlook is too optimistic, then it won't make sense to pay the steep premium. Either way, investors have high expectations for Starbucks.