StockStory flags flat sales and margin drop at Starbucks

Starbucks Corp. stock (SBUX) fell to $91.86 over the past six months, eroding shareholder value by 6.7% while the S&P 500 index climbed 12%. Analysts at StockStory cite stagnant organic demand and shrinking profitability as primary reasons to avoid the stock, noting that the current valuation prices in significant future success.

The company’s same-store sales, a metric tracking revenue growth at locations open for at least a year, remained flat over the last two years. This lack of movement in existing dining locations indicates that Starbucks is not generating meaningful organic growth from its established footprint. Sell-side analysts project that Starbucks’s revenue will drop by 1.9% over the next 12 months, a sharp reversal from the 5.7% annualized growth rate recorded over the past seven years. This forecasted decline suggests potential challenges in consumer demand for the company's menu offerings.

Profitability metrics further complicate the investment case. Starbucks’s operating margin, which accounts for expenses such as food costs, wages, rent, and advertising, decreased by 3 percentage points over the last year. The trailing 12-month operating margin stands at 7.8%. StockStory notes that revenue growth typically provides leverage on fixed costs, leading to better economies of scale; however, the recent margin compression raises questions about the efficiency of the company's expense base despite this dynamic.

With the stock trading at a forward P/E multiple that implies positive news is already reflected in the price, StockStory argues that better opportunities exist in other sectors, specifically pointing to software and edge computing stocks as preferable alternatives. The firm also highlights momentum stocks such as Nvidia Corp., which rose 1,460% between June 2020 and June 2025, and Exlservice Holdings Inc., which gained 271% over the same period, as examples of companies where elite fundamentals meet near-term momentum.