By Famed investor Jim Cramer says a 4.0% same-store sales growth in Starbucks (NASDAQ: SBUX) earnings is the only number investors should focus on, and the only number that explains why the stock is pushing higher on Wednesday.
While Starbucks came in shy of profit estimates in its fiscal Q1 and issued muted guidance for the full-year, the Mad Money host believes the firm’s new chief executive, Brian Niccol, has “cracked the code”.
In a segment of CNBC today, he recommended buying Starbucks stock that’s currently down some 15% versus its 52-week high.
Why Cramer recommends buying Starbucks stock
Cramer acknowledged that bears would still argue that Starbucks’ margins remained disappointing in its fiscal first quarter.
But much of it was related to Niccol’s commitment to reinvesting in the business to make the stores look better – and make the customers want to spend some time in the outlets.
That helped Starbucks witness traffic growth (3%) in its financial Q1 for the first time in two years. So, it was money well spent, the former hedge fund manager argued.
“First, you get people to the stores, then you work on gross margins,” he added.
Note that “SBUX” stock currently pays a healthy dividend yield of 2.54%, which makes it all the more exciting to own, at least for income-focused investors.
Why muted guidance doesn’t matter much for SBUX shares
The bear argument for Starbucks shares also hinges on the firm’s guidance for fiscal 2026, which came in shy of Street estimates on Wednesday.
However, what it reflects is “conservatism” only – something that Brian Niccol is known for since his time at Chipotle, Cramer noted this morning on CNBC.
According to him, what’s more important than any miss or weak guidance is traffic. “You have to get people in the store first – and then everything follows,” the famed investor maintained.
Note that SBUX is currently trading decisively above its major moving averages (50-day, 100-day, 200-day), reinforcing that the bullish momentum could sustain through the remainder of 2026.
Starbucks to steal traffic from Dunkin’, Luckin, and Dutch Bros
In a post-earnings appearance on CNBC, Jim Cramer applauded the chief executive’s decision to close underperforming stores and open new ones in cities where Starbucks doesn’t already have a strong presence.
All in all, he believes the company’s US, international, and China growth suggests “it’s back” and in a strong position to steal traffic back from the likes of Dunkin’ and Luckin Coffee.
In fact, outperforming chains like Dutch Bros should also be “concerned” now – the Mad Money host concluded.
Wall Street agrees with Cramer’s optimism on SBUX shares as well.
The consensus rating on the coffee chain sits at “moderate buy” currently, with price targets going as high as $120 – indicating potential upside of more than 20% from here.
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