PEG Ratio

The PEG ratio combines a stock’s price-to-earnings ratio with its expected earnings growth rate—a PEG of 1.0x is considered fairly valued, so SBUX’s current 2.36x means investors are paying $2.36 for every $1 of projected growth, indicating a premium.

That premium is steep next to the sector median of 1.00x, and the stock sits at the 77th percentile among its peers, meaning it is more expensive on a growth-adjusted basis than about three-quarters of them. Over the last eight quarters the trend has been increasing, with a quarter-over-quarter rise of +5.4% from 2.24x to 2.36x; year-over-year data is not available. The combination of an already elevated level and a rising trend points to potential downside risk if growth fails to meet expectations, as the stock is pricing in increasingly optimistic assumptions. This metric supports the overall CAUTIOUS verdict directly—a high and climbing PEG ratio suggests limited margin of safety and elevated valuation risk relative to peers.

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