Starbucks’ Stock Down 17% In Five Years

Starbucks' net income cratered from $4.25 billion to a $2 billion run rate, dragging shares down 17% over five years against the S&P's 70% gain.

CEO Brian Niccol's menu and service changes at SBUX face stiff competition from MCD and Dunkin', making double-digit same-store sales growth essential for a true recovery.

Investors fixated on Starbucks' historically strong earnings may be overlooking whether Niccol's turnaround can ever restore the company's peak profitability.

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What can Starbucks' (NASDAQ: SBUX) management say about its stock? Shares are up 24% this year compared to the S&P, which has risen 9%. Over the last year, it is up 12% compared to the S&P at 19%. Over the last five years, its shares have fallen 17% compared to 70% for the S&P.

The multiyear slide in share price is almost certainly due to a drop in net income. To reach the net income of fiscal 2023, which was $4.25 billion according to Morningstar, is almost impossible. The number dropped to $3.76 billion in fiscal 2024 and $1.87 billion in fiscal 2025. At the current annual run rate, based on the Q2 2026 fiscal results, Starbucks' net income for this fiscal year will be about $2 billion, up 12%. Given the benefit of the double, based on the net income trajectory, put the future at $2.5 billion. It is still well short of Starbucks's best years.

The challenge that Starbucks will find most difficult is same-store sales. Granted, this rate was over 6% last quarter. However, it would need to be into the double digits for Starbucks to truly recover.

At this moment, CEO Brian Niccol is admired for his work so far. After a slow start, Starbucks has gained momentum. However, it may find itself up against a wall. That wall is built by McDonald's (NYSE: MCD), Dunkin' Donuts, and other national chains that serve breakfast and tens of thousands of local coffee shops. Starbucks' challenge is to gain market share against this army.

Starbucks has some weapons, it appears. Niccol has changed the menu. He said service is faster, although that is hard to prove from the outside. He has, perhaps, started a successful move to make Starbucks stores what they once were: community destinations.

Starbucks' biggest problem is that investors may be looking back, instead of forward. Starbucks' past was bright. As for the future, it is a guess.

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