SBUX Stock Rockets 7% Despite Starbucks Misses Earnings Estimate

Starbucks earnings days have stopped being just about coffee. They have become a progress check on one of the most high-profile consumer turnarounds in recent years. On January 28, Starbucks reported Q1 FY26 results that technically missed earnings estimates, yet the SBUX stock is up more than 7% in pre-market trading as per Google Finance as investors focused on improving sales momentum, early turnaround wins, and a clearer roadmap for 2026.

The headline may say “earnings miss,” but the market reaction tells a more nuanced story about expectations, recovery signals, and CEO Brian Niccol’s “Back to Starbucks” strategy.

Let’s break down with this blog Starbucks’ Q1 FY26 earnings snapshot, estimate comparisons, why the stock rallied, management commentary, 2026 guidance, and what analysts expect next.

Starbucks Q1 FY26 Earnings Snapshot

Source: Starbucks Earnings Release

Starbucks delivered stronger-than-expected revenue growth, driven by a rebound in customer traffic and higher transaction volumes. Global comparable sales rose 4%, well ahead of Wall Street expectations of roughly 2%-2.3%. North America posted its first meaningful comp growth in nearly two years, while China and international markets showed improving demand trends.

However, profitability took a hit due to higher labor costs, restructuring expenses, coffee price inflation, tariffs, and continued investments in store upgrades and workforce improvements. Net income dropped sharply, pulling EPS below consensus despite better-than-expected top-line performance .

Did Starbucks Beat or Miss Analyst Estimates?

Starbucks beat revenue expectations but missed earnings estimates.

• Revenue: $9.9B vs ~$9.7B expected (beat)
• EPS: $0.56 vs ~$0.58-$0.59 expected (miss)

The miss was largely cost-driven rather than demand-driven. Labor investments, restructuring charges, and coffee-related cost pressures compressed margins even as sales improved. This marks another quarter where Starbucks’ revenue trends look healthier than its near-term earnings power .

Why Did SBUX Stock Jump Over 7%?

Yes, SBUX Stock did jump jump over 7% in pre-market trading as per Google Finance. At first glance, a stock rally after an earnings miss looks counterintuitive. But investors were reacting to three key positives:

• Sales momentum is returning: Global comparable sales growth of 4% beat expectations, with US transaction growth turning positive for the first time in roughly two years.
• The turnaround narrative is gaining credibility: CEO Brian Niccol’s “Back to Starbucks” strategy is starting to show tangible traction, especially in North America and China.
• Clearer long-term guidance and targets: Starbucks reinstated full-year targets and outlined FY26 expectations, signaling management confidence in stabilizing the business.

Markets interpreted the quarter as “early recovery with temporary margin pain,” rather than structural decline.

CEO Commentary: “Back to Starbucks” Is Gaining Momentum

CEO Brian Niccol emphasized that Starbucks’ turnaround is unfolding largely as planned. The strategy focuses on simplifying menus, strengthening core beverages, improving store experience, and rebuilding customer frequency.

Key themes from management commentary include:

• Menu simplification, including cutting ~30% of US offerings.
• Renewed focus on core drinks such as lattes.
• Store optimization and closures of underperforming locations.
• Operational streamlining to improve speed and consistency.
• Early success in driving transaction-led top-line growth

Niccol noted that Starbucks is prioritizing top-line stabilization first, with margin recovery expected to follow as efficiency initiatives mature.

FY26 Guidance: What Starbucks Is Forecasting

Starbucks reinstated fiscal 2026 guidance, signaling renewed visibility into performance.

Key FY26 outlook highlights:

• Global same-store sales growth: 3% or higher
• Adjusted EPS: $2.15-$2.40
• Store expansion: 600-650 new cafes planned
• Continued investment in workforce, store upgrades, and operations

While the EPS midpoint sits slightly below some analyst expectations, the company’s willingness to reinstate guidance suggests confidence in stabilizing demand trends and executing its turnaround plan .

What Analysts Are Saying Going Forward on SBUX Stock

Wall Street’s tone is cautiously optimistic.

Bullish angles:

• Improving US same-store sales after a prolonged slowdown.
• China showing stronger momentum, aided by licensing strategy changes
• Potential margin upside beyond 2026 if efficiency efforts scale

Key concerns:

• Near-term margin pressure from labor, tariffs, and coffee prices
• Slow pace of EPS recovery, with meaningful profit acceleration expected only after 2027
• Competitive intensity in China and premium coffee markets

Several analysts believe Starbucks’ recovery will be gradual rather than immediate, but view the current phase as an early step in a multi-year turnaround cycle.

What to Watch Next for Starbucks Investors

Looking ahead, investors will track:

• Sustainability of US transaction growth.
• Progress in margin recovery as costs normalize.
• Execution of menu simplification and store optimization.
• Performance in China following licensing model adjustments.
• Investor Day updates and long-term financial targets.

Starbucks may have missed earnings this quarter, but improving sales trends and clearer strategic direction are reshaping investor expectations. For now, the market seems willing to look past short-term margin pressure in favor of long-term recovery potential.

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