In short: Used once, as the comparison that makes 42x acceptable to him: "but Starbucks is at 34. Starbucks is not growing." That is the entire mention — a relative-value reference point, not a view on Starbucks.
51:50— Expensive. Yeah, I agree. It's just a restaurant — but Starbucks is at 34. Starbucks is not growing. And then why it's cheaper — normally in US this type of growth people pay way more. And people are worried about a lot of competition in coffee. I give you an example. Cava — yes — Cava is a new like Chipotle equivalent — trading at 92 times earnings.
In short: Belski moved it between his own portfolios — out of value, into tactical — on conviction rather than price. "Starbucks is a secular operating recovery story, period. And Brian's come in and completely reshaped the operating standpoint of this company" — Brian Niccol, from Chipotle. "We sold it from our value portfolio a month ago and put it in our tactical, because we firmly believe that this is going to be a long term winner in that consumer discretionary space." It is the one restaurant name he defends on operations rather than theme.
Starbucks is in the middle of an operational turnaround under Brian Niccol, who ran Chipotle before joining. Belski's view is that this is not a cheap-stock story but a company-getting-better story — the operations themselves have been "completely reshaped."
The interesting evidence is what he did with it inside his own firm. He moved the stock out of the value portfolio and into the tactical portfolio a month ago. A value portfolio holds things because they are cheap; a tactical one holds things because something is changing. Moving it says, in his own accounting, that he no longer thinks the reason to own it is the price.
In short: Measurable momentum. Q3 revenue (June quarter) −1% Y/Y to $9.3B ($200M beat) and adjusted EPS +70% to $0.85 ($0.20 beat) — the revenue decline is entirely the China deconsolidation. The critical indicator: global comparable sales +8% against a ~6% consensus, with US comps also +8% on 4% transaction growth — the fourth straight positive comp after seven negative quarters, accelerating from 6% last quarter. Store "uplifts" passed 1,000 across North America (the full-year goal, hit early; now targeting at least 1,500 by year-end), US 90-day active Rewards members reached 35.8 million, and food attach hit a Q3 record. Non-GAAP operating margin expanded 430 bps to 14.4% — with a caveat: North America margin rose only to 13.6% from 13.3%, and the consolidated expansion leaned on tariff refunds covering three quarters of duties plus a favourable tax comparison, so management said the year-to-date view is the more normalised read. China is now a 40% licensed JV with Boyu Capital, contributing just $53M of revenue at a margin above 100% (flattering international metrics). FY26 guidance raised again — global comps nearing 6%, consolidated margin above 11%, Q4 US comps 6.5%+; leverage down to 2.9x after repaying ~$1.8B with China proceeds. Watch whether North America margin keeps expanding on its own. (Recap, not a stance call.)
"Comparable sales" measures growth at stores open more than a year — it strips out new openings, so it shows whether the existing business is actually getting better. Starbucks grew 8% globally and 8% in the US, with a quarter of that from more customers walking in rather than higher prices. That's the fourth straight positive quarter after seven negative ones, and it accelerated. Revenue fell 1% only because Starbucks handed 60% of its China business to a partner and no longer consolidates it. The caution is on margins: the headline 4.3-point improvement leaned on tariff refunds covering three quarters of duties plus a favourable tax comparison, and management said the year-to-date view is the fairer read — North America's own margin barely moved, from 13.3% to 13.6%. The test is whether that keeps expanding once the refunds stop. A recap, not a call.
In short: "Starbucks has been a turnaround story that finally looks like it's working." EPS 85c, +70%; "while overall sales fell slightly, same store sales climbed almost 8% and that's the figure analysts care the most about."
Starbucks has been a multi-year turnaround attempt that repeatedly failed to turn. This quarter it did: profit per share up 70%, and — the metric that counts for a restaurant chain — same-store sales up almost 8%.
Same-store sales measure how much more the existing shops sold versus a year ago, stripping out new openings, so it can't be flattered by expansion. Note that total sales actually fell slightly (the chain is running fewer stores), which is exactly why the same-store number is "the figure analysts care the most about": the stores it kept are performing.
15:41In comparing Microsoft versus Meta, it's clear that Microsoft's cloud business is doing great and powering the overall company. Meta does not have that business and is trying to play just in the LLM space which is expensive and not yet lucrative enough. Moving on, Starbucks has been a turnaround story that finally looks like it's working.
In short: Q&A: reportedly using AI to build in-house software to replace Microsoft/Oracle. Singh hasn't dug in yet but flags the ability of non-tech mega-caps to self-build admin software as a structural headwind for enterprise-software monocultures (a future short thread).
Starbucks reportedly used AI to build its own internal software and cut what it pays Microsoft and Oracle. Singh hasn't studied it in depth yet, but flags the bigger implication: if ordinary big companies can now use AI to write their own business software, that's a long-term threat to the traditional enterprise-software giants — a potential short idea he wants to dig into.
Full passage: premium transcript (PDF).
In short: Discretionary is getting hit hard today — that's where the opportunities are, in best-in-class names. Starbucks is one of the two she singles out to buy on the dislocation; the whole call rests on a consumer that keeps consuming.
When a whole sector sells off in one day, the highest-quality companies in it get dragged down with the weak ones — even though nothing actually changed about their business. Link's discipline is to use that to buy "best-in-class" names cheaper. Starbucks is her example in consumer-discretionary: a dominant, recognizable franchise she'd add on the dislocation, because her bigger bet is that the consumer keeps spending (jobs, wages and incomes are all holding up).
In short: A turnaround that finally turned — 2nd straight quarter of traffic growth, EPS 0.50 vs 0.42 est (0.41 last yr), revenue beat, SSS +6.2% (mostly North America), raised full-year outlook. Stock +5% after hours, +8% by Wednesday. "Investors are finally rewarding the company's business changes."
Starbucks is the coffee chain whose turnaround "stubbornly refused to turn around" — until maybe now. The key number for any retailer is same-store sales (sales at shops open at least a year, which strips out new-store growth), and Starbucks just posted +6.2%, its second straight quarter of more customers walking in. Earnings beat, it raised its full-year outlook, and the stock jumped 8%. Eisman's lesson: inflection points are hard to time because real fixes take time to show up — you rarely catch the exact bottom.
15:45Moving on, Starbucks. This has been a turnaround story that stubbornly refused to turn around until perhaps this quarter. Starbucks reported its second straight quarter of traffic growth. EPS was 50 cents versus 42 cents expected and versus 41 cents last year. Revenue also beat. Same-store sales growth rose an impressive 6.2% largely because of North America. It also raised its full-year outlook. Impressive, and the stock was up 5% after hours on Tuesday night and up over 8% by the end of day on Wednesday and flat at the end of day Thursday. Investors are finally rewarding the company's business changes. I think the takeaway is that inflection points are hard to predict because real corporate changes take time to implement and catching any bottom or top at exactly the right moment is very difficult.
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