Earnings Momentum Keep Starbucks (SBUX) a Sell

Starbucks Corp (NASDAQ:SBUX) is one of the 567 companies in the GICS Consumer Discretionary sector, and a component of the 120 company Hotels Restaurants & Leisure GICS industry group within this sector. SBUX’s market value is $82.1 billion which falls in the top decile in its industry group. The current Portfolio Grader ranking for SBUX puts it 97 among the 120 companies in this industry group, a spot that is well below-average; squarely in the bottom quartile of the sector with a ranking of 455 among the 567 companies in the sector, and number 3,934 in the nearly 5,000 company Portfolio Grader universe.

SBUX has a current recommendation of Sell using Louis Navellier’s investing methodology and his Portfolio Grader stock evaluator. SBUX has maintained this ranking for 5 months.

Currently, Portfolio Grader ranks the Consumer Discretionary sector number 11 among the 12 sectors in its universe putting it in the bottom quartile of all the GICS sectors. The Hotels Restaurants & Leisure industry group is ranked 36 among the 69 industry groups within the GICS sectors, placing it below-average in terms of the Navellier scoring system.

The scores achieved by the company are average or below-average scores in 7 of the 8 areas evaluated by Portfolio Grader in the ranking of company stocks.

The company’s operational scores are below the industry norms for sales growth, operating margin, and earnings growth. Scores for visibility of earnings are worse than the industry norms for earnings revisions, earnings surprises, and earnings momentum. SBUX’s ranking for return on equity is decidedly better than its industry group average but its grade for cash flow is below-average. Based on these fundamental scores, Starbucks places in the top half of the industry group.

Portfolio Grader quantitatively measures SBUX’s shares using the Navellier Proprietary Quantitative Score. This metric looks at SBUX’s shares from the perspective of risk/reward. This unique scoring approach weighs the relative value of SBUX’s shares based on the current price of the shares relative to its peers, the market and risk associated with its industry and sector groups. Considering this risk/reward calculation, the company currently scores well below-average in its industry group compared to its peers.

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results, with A being ‘strong buy’ and F being ‘strong sell’. Explore the tool here.

Commentary provided by UpTick Data Technologies.