Starbucks Corp (SBUX) shares dropped nearly 16% yesterday following their earnings release for fiscal Q2 which was worse than anticipated and marked a historically weak quarter. Starbucks was already in the Unfavored zone of the SIA S&P 100 Index Report and fell 7 more spots yesterday to the 100th ranking out of 103 investments. Starbucks has been in the Unfavored zone since June of last year and is down around -25% during this time period. SIACharts’ Relative Strength rankings can help investors identify which stocks in a universe are underperforming against their peers and could potentially help stay away from earnings misses like Starbucks experienced yesterday.
US same-store sales dropped by 3% compared to an expectation of more than 1.2% as cautious consumer spending and a deteriorating economic environment weighed on customer traffic. Similarly, China experienced a decline of 11% in sales against an expected 2%. Operational margin stood at 12.8%, lower than the expected 14.4%, with EPS at $0.68 compared to the expected $0.80. Global revenue growth is pegged at low-single digits, compared with the previous guidance for a 7% to 10% gain. The retailer also forecasts global comparable store sales to be flat to down by low-single digits, compared with prior expectations for 4% to 6% growth. The company's long-term growth depends on several sales drivers and correcting some recent actions, as well as implementing cost efficiency measures according to analysts. Looking at a candlestick chart over the last five years using weekly time periods, we can see SBUX gap down significantly on the earnings miss yesterday marking the largest one week drop in this time frame. This has continued its recent trend downwards from its all-time highs from July of 2021 and its recent one year high from May of 2023. We could see support just below the $70 level based on previous lows from the spring of 2022 and past moves.
Starbucks Corp (SBUX) is currently in a column of 17 O's in a 2% Point and Figure chart which represents around a 35% drawdown while filtering out the short term noise. To the downside, support can now be found at around $70
and below this at $65.85 which corresponds to the lows from 2022 and the summer of 2020.
Resistance can be found above at $81.88 should a reversal happen. Further support can be found at around $90. With a bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 0 out of 10, SBUX is still exhibiting short-term weakness against all asset classes.
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