Is Starbucks stock a ‘buy’ after better-than-expected Q3 earnings?

Shares of Starbucks Corporation (NASDAQ: SBUX) are in the green this morning after the chain of coffeehouses reported better-than-expected profit for its fiscal third quarter in the face of a big hit to comparable sales in China.

Stephanie Link likes Starbucks stock

Versus the start of 2022, Starbucks stock is still down about 30% that, as per Hightower’s Stephanie Link, is an opportunity to buy a quality name at a deep discount. This morning on CNBC’s “Squawk Box”, she said:

Starbucks is a turnaround story. They have an analyst day in September, that’s your catalyst. And of course, Howard Schultz is back. So, I think Starbucks stock is very interesting, trades at the low end of its historical range. I like that one a lot.

Her constructive view is in line with Wall Street that currently has a consensus “overweight” rating on Starbucks stock. According to the multinational, same-store sales in China tanked 44% YoY on COVID restrictions. Link, however, drives her optimism from the strength in North America.

It was very encouraging to see the comps in North America at 9.0%. Ticket was up 8.0% so they’re getting price. China was down 44%, but that was the worst because they reopening now.

Starbucks Q3 earnings snapshot

• Earned 84 cents a share (adjusted) down from 99 cents last year
• Net sales climbed 9.0% on a year-over-year basis to $8.20 billion
• Consensus was 77 cents of adjusted EPS on $8.15 billion in sales
• Global comparable sales went up 3.0% versus 3.2% expected

Adjusted operating margin slipped from 20.4% to 16.9% Starbucks ended the quarter with 27.4 million (13% up) active “Rewards” members in the U.S., as per the earnings press release. It, however, terminated share buybacks and refrained from guiding for the fiscal fourth quarter.