(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of SBUX.)

Starbucks Corp. (SBUX) stock price has underperformed for three years, rising by only 19.9% versus an S&P 500 that has climbed by nearly 28% over the same period. Slowing revenue and earnings growth have plagued the stock, and Starbucks has paid dearly for that slowdown. But after years of waiting, the company's valuation is finally at attractive levels, and analysts appear to be jumping on board.

The company reaffirmed its target of growing earnings at 12% per year for the next three years, while also announcing that it plans to roll out its mobile ordering app to all customers. Meanwhile, analysts are forecasting for earnings to grow by nearly 21% in 2018, and 12 to 13% in the year 2019 and 2020, and see the stock rising by more than 10%—according to data from Ycharts—from a price around $58.20

SBUX Revenue (Annual YoY Growth) Chart

Analysts Are Bullish

Analysts are bullish on Starbucks, with an average price target on the stock of $64.50. Since November the average price target has risen by just over 4% from $61.92. Of the 34 analysts that cover the stock, about 68% have a "buy" or "outperform" rating on the shares, with 32% having a "hold" and "sell" rating. 

SBUX Price Target Chart

Finally Cheap?

Starbucks shares are currently trading at nearly their lowest one-year forward earnings multiple in years, at less than 21 times 2019 earnings estimates of $2.80. The fall in its earnings multiple has come as revenue and earnings growth has slowed materially over the past few years. But even at that multiple, when adjusted for projected growth one could make the argument that the stock is expensive with a 2019 PEG ratio of 1.69. But, according to data from Ycharts, of the 42 restaurant stocks in the Russell 3000 index, the average one-year forward PE ratio is 27.2, with a median of 19.2, making Starbucks cheaper than most of its peers. (For more, see also: 3 Best Coffee Stocks for 2018.)

Fundamental Chart Chart

Option Bulls

Even the options market is looking for shares of Starbucks to rise by expiration on January 18, 2019, using the $60 strike price. The call options heavily outweigh the put options, by over 2 to 1, with 20,300 call contracts of open interest, to only 8,700 put contracts. It gives the calls a notional value of about $7.8 million, a sizable bet. The stock price would need to increase to $63.85 just for the option to break even. 

But despite all the optimism the company is going to need to make good and deliver the earnings growth it is telling investors. If that happens, perhaps 2018 will be the year that Starbucks stock starts moving higher again. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.