Starbucks (SBUX 0.48%) stock has been on a big run this year. And that momentum just received another boost from the company's strong fiscal first-quarter earnings report.
For investors worried about Starbucks' turnaround efforts, they could breathe a sigh of relief on Wednesday. Not only did the company's comparable-store sales accelerate, but it also returned to positive traffic trends at its U.S. stores.
"Our Q1 results demonstrate our 'Back to Starbucks' strategy is working, and we believe we're ahead of schedule," said Starbucks CEO Brian Niccol in the company's fiscal first-quarter earnings release.
Image source: Starbucks.
A clear inflection point
It was already clear by the end of fiscal 2025 that Starbucks' business was improving. Revenue in its fiscal fourth quarter of 2025, for instance, grew 5% year over year. This was a notable acceleration from growth rates earlier in the year. For instance, revenue in its fiscal second quarter rose only 2% year over year. And its full-year fiscal 2024 revenue grew just 1% year over year.
But the most notable inflection in Starbucks' business in fiscal Q1 has been in its comparable store sales metric that measures sales growth at stores open for more than one year, as well as e-commerce sales. Starbucks' comparable store sales grew 4% year over year in fiscal Q1, an acceleration from just 1% growth in the prior quarter.
Also encouraging was Starbucks' acceleration in U.S. comparable store sales. Comparable store sales in Starbucks' home market rose 4% year over year in fiscal Q1, up from flat performance in fiscal Q4. Even more, behind Starbucks' 4% growth in comparable store sales in the U.S. in the first quarter of fiscal 2026 was a 3% increase in comparable transactions and a 1% increase in average ticket. This 3% growth in comparable transactions importantly suggests that the traffic in its stores has turned positive. This is a nice change from Starbucks' 1% year-over-year decline in comparable transactions and fiscal Q4.
This inflection in Starbucks' business led to robust overall fiscal first-quarter results, with revenue rising 6% year over year to $9.9B.
Starbucks' earnings per share, however, fell 62% year over year as the company's investments to support its turnaround plans weighed on results. Tariffs and elevated coffee pricing also hurt profitability, management said.
Management's turnaround plan is taking hold
Ultimately, results like this suggest the Starbucks restructuring effort is working, as CFO Cathy Smith explained in the company's fiscal first quarter update, these results give the company a "clear line of sight to translating topline strength into sustainable earnings growth that positions us for long-term profitable growth."
Importantly for investors, management put numbers behind this optimistic statement. First of all, management said in its earnings call that its comparable store sales trends continued to be strong in January. Further, the company guided for comparable store sales to grow "3% or greater" both globally and in the U.S. And management said it expects a similar growth rate for its total revenue, even as it opens 600 to 650 new coffeehouses (net of any closures).
NASDAQ: SBUX
Key Data Points
While these results were impressive, the turnaround may already be priced into the stock. After all, Starbucks' forward price-to-earnings ratio is about 40. This means that shares trade at 40 times analysts' consensus earnings per share forecast for the next 12 months. A valuation like this bakes in robust single-digit revenue growth and even prices in a significant expansion in the company's operating margin as restructuring costs roll off.
Even though Starbucks' fiscal first-quarter results make it clear that the company's turnaround efforts are working, I'd still stay away from the stock because the market seems to already be pricing in the success of its "Back to Starbucks" plan.
For investors interested in the stock, the best course of action for now may be to tune in to the company's Investor Day presentation tomorrow to see if management articulates a clear path back to consistent double-digit earnings-per-share growth over the long haul. Without an earnings profile like this, the stock should probably be avoided -- at least at its current valuation.
