Starbucks Just Raised Starbucks' Full-Year Profit Guidance by About 10%. Here's the Number Behind It.

Starbucks (NASDAQ: SBUX) just raised the coffee giant's full-year profit forecast by about 10%. The company now expects fiscal 2026 non-GAAP (adjusted) earnings per share of $2.55 to $2.65, up from $2.25 to $2.45 -- a jump of roughly 10% at the midpoint, delivered alongside fiscal third-quarter results on Wednesday.

The number driving the upgrade is 7.9%. That's how much global comparable store sales grew during the quarter, and more of the growth came from customer traffic than from higher prices.

Comparable transactions rose 4.2% globally, while average ticket increased 3.5%. In the U.S., the split was nearly identical, with comparable sales up 7.9% on 4.2% transaction growth and a 3.6% rise in ticket. International comparable sales climbed 5.7%.

The composition matters. Growth that comes from more customers showing up tends to be more durable than growth that comes from charging them more, and transactions are the metric Niccol's Back to Starbucks turnaround has been trying to move since it began.

"Our Back to Starbucks plan was built on the belief that an extraordinary cup of coffee, human connection and customer experience win the day, every day," Niccol said in the company's fiscal third-quarter earnings release. "Our third quarter results are proof they do."

Image source: Starbucks.

Where the raise comes from

The profit recovery is arriving even faster than the sales recovery. Non-GAAP operating margin expanded 430 basis points year over year to 14.4%, helped by sales leverage, lower inflation, and a largely one-time round of tariff refunds. Adjusted earnings per share came in at $0.85, up 70% year over year.

Revenue was the one line that barely moved. At $9.3 billion, it slipped 1% -- a decline that reflects the conversion of Starbucks' China business to a joint venture structure, not softer demand. The company ended the quarter with 41,304 stores worldwide after opening 175 net new locations.

Alongside the new earnings range, management now expects U.S. comparable sales to grow slightly more than 6% for the full fiscal year, with fiscal fourth-quarter U.S. comparable sales of 6.5% or greater and adjusted operating margin above 11%.

The market repriced quickly. Shares rose about 5% in after-hours trading Wednesday, as of this writing, back near their 52-week high of $109.23. Even with the bigger profit forecast, the stock trades at about 42 times earnings based on the midpoint of the new guidance range.

A multiple like that assumes the traffic keeps building and the margin recovery runs well beyond this year. Wednesday's report is arguably the strongest support that assumption has received yet. It just doesn't leave the stock any cheaper than it was before the good news.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool has a disclosure policy.