Shares surged 10.7% to $115.25 after Starbucks delivered a quarter that silenced skeptics and forced the Street to recalibrate. Adjusted earnings hit $0.85 per share versus the $0.66 analysts expected, on revenue of $9.32 billion against estimates of $9.16 billion.

It was the company's fourth consecutive quarter of positive same-store sales growth and second straight quarter of margin improvement — a combination that turns a turnaround narrative into something investors can actually price.

  • The Earnings Beat Was Big Enough to Matter Net income nearly doubled year-over-year to $1.05 billion, or 91 cents per share, up from $558.3 million, or 49 cents per share. That's not a rounding-error beat — adjusted EPS came in 29% above consensus. Same-store sales, which measure revenue at locations open for at least a year, jumped 7.9%, well ahead of the 6% Wall Street expected.

North America drove the surge with an 8.1% comparable-store sales increase, fueled by both higher customer traffic and a 3.5% rise in average ticket.

  • Management Raised Guidance — For the Second Time This Year Starbucks now expects full-year adjusted EPS of $2.55 to $2.65, up sharply from the prior range of $2.25 to $2.45, and projects global same-store sales growth of nearly 6%, up from at least 5%. Back in April, the company had already lifted guidance once. Raising it twice in one fiscal year signals management believes the recovery is durable, not seasonal.

  • China Is Off the Books — and That's the Point Overall revenue dipped 1% to $9.3 billion because Starbucks sold a controlling 60% stake in its China operations to Boyu Capital.

The deal shifts the company to a lower-revenue, higher-margin structure — meaning the headline revenue decline actually masks a cleaner, more profitable business underneath. Investors should compare profit growth, not revenue, when measuring progress from here.

  • The Stock's Valuation Now Prices In a Lot of Good News At $115.25, Starbucks trades at roughly 43–45 times the new midpoint of full-year earnings guidance (~$2.60). Shares had already climbed 23% since January before this report , and the post-earnings pop pushes the stock well above the prior consensus price target of about $106. GAAP operating margin expanded 60 basis points to 10.5% — progress, but still far below the 16%+ levels Starbucks posted two years ago. CEO Niccol's turnaround is real, but the remaining margin recovery must now keep pace with an increasingly ambitious stock price.