Starbucks Raises Its Full-Year Guidance as Comparable Store Sales Jump 7.9%. Here’s What Investors Need to Know.

Written by Danny Vena for The Motley Fool->

Starbucks sales, profits, and comps growth all exceeded Wall Street's expectations.

CEO Brian Niccol's "Back to Starbucks" turnaround is delivering as promised.

The company admits there's still more work to do.

Once upon a time, Starbucks (NASDAQ:SBUX) was about as close to a "sure thing" you could get in investing. However, after years of dependable increases, its growth stalled, as cool as day-old joe.

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The company swung for the fences, tapping former Chipotle CEO Brian Niccol to put things right, and his efforts are beginning to pay off. Starbucks faced a crucial test when the company reported after the market close on Wednesday, and the results were positively steamy.

For the company's fiscal 2026 third quarter (ended June 28), Starbucks generated net revenue that declined 1% year over year to $9.3 billion, reflecting the divestiture of its Starbucks China operation. This fueled earnings per share (EPS) of $0.91, up 86%, while adjusted EPS of $0.85 climbed 70%.

To give these results context, analysts' consensus estimates were calling for revenue of $9.12 billion and adjusted EPS of $0.65, so Starbucks sailed past Wall Street's expectations.

The results were fueled by comparable-store sales (comps) that climbed 7.9%, as customers visited its shops more often and spent more money when they did. That drove a a 4.2% increase in transactions and a 3.5% increase in the average ticket.

The details showed clear signs that Starbucks' recovery is on track. Comps in North America -- the company's biggest market -- increased 8.1%, driven by a 4.5% increase in transactions and 3.5% increase in the average ticket. At the same time, international comps improved 5.7%, as transactions increased 2.6% and ticket total increased 3.1%. Management noted that this marked the fourth consecutive quarter of global comp growth, as well as two consecutive quarters of margin expansion.

Niccol commented on the results, saying, "Our Back to Starbucks plan was built on the belief that an extraordinary cup of coffee, human connection, and customer experience win the day, every day. Our third quarter results are proof they do." He went on to note that while there was more work to be done, Starbucks' goal was to become "the world's greatest customer service company."

The company also opened 175 net new stores in Q3, bringing its total to 41,304 locations worldwide.

Starbucks completed the previously announced joint venture (JV) with Boyu Capital, which now operates the coffee chain's retail stores in China. To that end, Boyu Capital owns a 60% stake in Starbucks China, while Starbucks owns a 40% stake, retaining ownership of the brand licensing and intellectual property.

Most interesting to shareholders (myself included) is management's perspective on the future. The company increased its full-year 2026 outlook and is now guiding for U.S. and global comps of 6% or more, up from its forecast of 5% growth delivered in Q2.

Earlier this month, Starbucks announced a quarterly dividend of $0.62, payable on Aug. 28, to shareholders of record as of Aug. 14. The 87% increase in net income to $1.05 billion was more than enough to cover the company's quarterly dividend obligation, which totaled roughly $709 million.

CFO Cathy Smith had previously stated, "We've been clear that top-line improvement would come first, with earnings growth to follow." The company has now made good on that promise, but investors should continue to monitor profitability to ensure the company can not only maintain the dividend at its current level but also generate sufficient earnings for future increases.

It's been roughly 21 months since Niccol came on board, and since then, Starbucks has delivered steady operational improvements. Those results are translating to better financial results.

This has made the stock as hot as a piping cup of java. It has also fueled a caffeine-fueled spike in the company’s valuation, as it’s now selling for 35 times next year's expected earnings. However, if Starbucks can continue to boost its comps and expand its margins, the multiple could turn out to be pretty reasonable.

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Danny Vena, CPA has positions in Chipotle Mexican Grill and Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends the following options: short September 2026 $35 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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