Starbucks (SBUX 0.84%) is up about 14% year to date as of this writing -- a sharp move for a coffeehouse chain that spent much of the last year working through slower traffic and cost pressure.
But there are some initial signs of Starbucks' turnaround taking hold. So, is now the time to buy? After all, the company's comparable store sales turned positive in fiscal Q4.
Or has the stock's rebound already gone too far, making it too late for investors who didn't buy on the recent dip to get in on Starbucks shares?
Image source: Starbucks.
Early signs of progress
Starbucks' turnaround efforts are starting to show up in the numbers.
In fiscal Q4 2025, Starbucks said revenue rose 5% year over year to $9.6 billion -- a small acceleration from fiscal Q3 2025, when revenue rose 4% to $9.5 billion, and a meaningful acceleration of 2% growth in fiscal Q2.
Further, the coffee company's North America comparable-store sales were flat in fiscal Q4 2025 -- an improvement from a 2% decline in fiscal Q3. But traffic at its stores, evident by a 1% decline in comparable transactions, was still moving in the wrong direction. However, even this was arguably good news, because it represents a huge improvement over the 3% decline in comparable transactions in North America in fiscal Q3 and a 4% decline in fiscal Q2.
Starbucks' international business has been performing better. Fiscal Q4 international comparable store sales rose 3% year over year. But this geographic segment has a different struggle: declining ticket sizes. Starbucks' international business benefited from a 6% increase in comparable transactions but saw a 3% decline in average ticket.
Helped by robust comparable-store sales growth, Starbucks' international segment reported 9% year-over-year revenue growth in fiscal Q4.
"Many of our top international markets contributed to strong comp sales performance in the quarter with China, Japan, the U.K., and Mexico leading the way," said Starbucks CFO Cathy Smith in the company's fiscal fourth-quarter earnings call.
Even with improving sales trends, profitability is still a weak spot for the coffee company. In fiscal Q4 2025, Starbucks reported non-generally accepted accounting principles (GAAP) earnings per share of $0.52, down 35% year over year, and it reported a non-GAAP operating margin of 9.4%, down 500 basis points from the same period last year.
Looking ahead
But investors shouldn't get too excited. Smith reminded investors in the company's fiscal fourth-quarter earnings release that "this continues to be a multi-year turnaround."
Further, management refrained from providing full-year guidance in its most recent quarter, with Smith telling analysts that it was "premature" to give guidance. Starbucks CEO Brian Niccol said in the earnings call that investors will need to wait until the company's Investor Day presentation on Jan. 29 to hear management's view for 2026, as well as its longer-term expectations for the business.
NASDAQ: SBUX
Key Data Points
Still, is the stock a buy given the progress the company is making on its turnaround plan?
Shares currently command a forward price-to-earnings ratio (a stock's price as a multiple of analysts' consensus forecast for earnings over the next 12 months) of 40. A valuation like this prices in not just a stabilization in operating margins and robust revenue growth, but benefits of operating leverage. In other words, this valuation implies that earnings will grow meaningfully faster than revenue over the next five years as the company benefits from the fruits of its turnaround plan.
I actually think this is a fair valuation. Starbucks' turnaround plan is already showing clear signs of taking hold, and many of its recent costs have been related to restructuring. So, it stands to reason that once the company's efforts to stabilize its business fade into the rearview mirror, Starbucks could benefit from operating leverage -- especially if top-line growth accelerates while costs are reined in.
The problem, however, is that the valuation leaves very little margin of safety. I'd prefer to buy this stock at a price that doesn't already factor in a successful turnaround -- a price that leaves some room for error if unexpected challenges arise.
With this said, I think Starbucks' recent business progress makes its shares worth holding (if you already own them). But I'd be more cautious about buying the stock after its sharp run-up in early 2026.
