Is Starbucks Stock Overvalued or Undervalued?

A Starbucks logo hangs outside of the Starbucks-owned American stores in the Brooklyn borough of New York on May 29, 2018. Lucas Jackson/Reuters

Starbucks Corporation shares have lagged the S&P 500 in 2021, generating a year-to-date total return of 8.9 percent.

At this point, investors may be wondering whether Starbucks shares are undervalued after their recent performance.

Earnings

A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value. For comparison, the S&P 500’s PE is at about 29.4, nearly double its long-term average of 15.9.