Starbucks (SBUX +0.63%) shareholders are finally breathing a sigh of relief after years of setbacks. Star CEO Brian Niccol's turnaround plan looks like it's actually working, the company is demonstrating strong growth, and the stock is reflecting that. Is it time to buy Starbucks stock? Let's take a look.
Coffee comeback
There are several ways to chart Starbucks' progress. First, there are the major metrics that are the story's headlines. Here's how it went down in the 2026 fiscal second quarter (ended March 29):
- Revenue increased 9% year over year.
- Comparable sales (comps) increased 6.2% year over year.
- Earnings per share (EPS) increased 32% year over year to $0.45.
Image source: Starbucks.
Those are fantastic results. Next, it's important to dig in and see what's driving those results to get a better picture of what's contributing to the growth and the company's overall health. These results were also positive. Here are a few important ones:
- U.S. comps were up 7.1%, with a 4.4% increase in transactions and a 2.6% increase in average ticket. The U.S. transactions piece was the main thing to watch in the quarter, because it signifies that comps growth is coming from higher engagement, not just higher prices. The average ticket increase could be from higher prices or larger orders. This is a trend that started in the first quarter, and it's a major improvement from recent performance. It's actually its best result in three years.
- Delivery was up 30% year to date. This is an expanding and exciting service that meets the moment.
- Cold drinks continue to perform well, and the introduction of new energy refreshers and mango flavor "exceeded expectations." Cold foam increased 40% in the U.S.
Another notable update was the finalization of the sale of the China business to a local partner. Starbucks says it's "the top away-from-home coffee choice" in the region, and it reported its fourth straight transaction-led comps growth in China in the second quarter.
NASDAQ: SBUX
Key Data Points
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The stock market liked what it saw, sending the stock 7% higher after the report.
There's a lot to like about the recovery prospects. Management is testing artificial intelligence (AI)-designed programs to improve scheduling and store efficiency, and it's renovating stores to refresh its image and capabilities. Starbucks also pays a growing dividend that yields 2.3% at the current price.
However, this all comes at a premium price. Starbucks stock trades at 80 times trailing-12-month earnings, which is a hefty price for a stock still in recovery.
Long-term investors looking for passive income can count on Starbucks, but investors looking for a great turnaround stock might want to find one that looks like a better bargain.
