For Starbucks (NASDAQ:SBUX) stock, it could be a lot worse right now. Starbucks stock has pulled back a little over 5% since touching an all-time high in early November. But SBUX stock still has risen 14% so far this year, and some 38% from the multi-year low reached in late June.

That’s strong performance in this market. But it’s especially impressive given how important the China bet is to Starbucks’ future growth.

Pretty much everything China-related has been sold off, whether it’s in-country firms like Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY) or China-exposed U.S. companies like Wynn Resorts (NASDAQ:WYNN) and Apple (NASDAQ:AAPL).

The performance is impressive, but it’s also surprising. Equally so is the fact that investors shrugged off some potential concerning news from the Starbucks Investor Day last week. Starbucks pulled back on long-term earnings projections while accelerating its plans for the Chinese market.

That combination of news, in this market, would seem like enough to start a stampede for the exits. Yet SBUX stock dipped just over 1% on Thursday and Friday combined, and actually outperformed the S&P 500.

That seems too casual a response from the market. I argued earlier this month that Starbucks stock looked like it had run too far, too fast. The takeaways from Investor Day seem to support that worry and suggest that all but the best-case scenario already is priced into SBUX stock.

The Starbucks Growth Target

There were several takeaways from Investor Day, but the biggest headline would seem to be the company’s projection for EPS growth going forward. Starbucks reduced its long-term target to 10%+ annual non-GAAP EPS growth, which is two points lower than the forecast given a little over a year ago.

To be fair, that figure is a bit in the eye of the beholder. SBUX stock trades at close to 25x fiscal 2019 (ending September) earnings estimates. Assume that multiple holds, and that Starbucks hits that growth target.

The Starbucks dividend already yields about 2.2% – and payouts should rise for years to come. Add that to the annual earnings growth, and SBUX stock should provide a total return of at least 12% for years to come. In that scenario, investors double their money roughly every six years.

That said, management targets aren’t always hit. Starbucks still is dealing with a substantial deceleration in same-store sales. Comps rose 7% in fiscal 2015, but just 2% in FY18, with traffic actually declining year-over-year. The model assumes that revenue growth accelerates going forward.

Meanwhile, does a company growing EPS 11% or 12% a year (with ~2 points of that growth coming from share buybacks) keep a nearly 25x P/E multiple in perpetuity? Not necessarily. The combination sets up a potentially bearish scenario should Starbucks growth disappoint at all.

Something closer to 8-9% growth likely supports a low-20s multiple at most. SBUX stock traded below 20x this summer, in fact. Slow earnings growth and model in earnings multiple compression and Starbucks stock barely gains going forward, if it gains at all.

From that standpoint, SBUX really only drives market-beating upside if management is right. Yet the same management team already has pulled down the outlook given just thirteen months ago.

The Bull Case for SBUX Stock

To be sure, the argument here isn’t that Starbucks stock is a short play (some $4 billion is sold short at the moment, however) This is still a wonderful company with years of growth opportunities ahead from operational improvements and new store growth worldwide.

The efforts in China, in particular, can drive upside to the company’s growth targets. Starbucks is looking to increase its store count in China by two-thirds over the next four years. It still sees room for growth in the U.S., primarily in the Midwest.

And the near-term outlook does look strong. The company expects fiscal 2020 and fiscal 2021 EPS to grow at least 13% a year. The company’s deal with Nestle (OTCMKTS:NSRGY) is providing some help (along with a modestly negative impact to fiscal 2019 profits).

Still, near-term growth could de-risk the story here: Starbucks is looking at EPS in fiscal 2021 of $3.50 or so. The current price at $68 thus suggests a seemingly reasonable sub-20x multiple to those out-year profits. That seems like a reasonable price to pay for a wonderful company that will still have both same-store sales and unit count to provide growth from that point on.

The Risks to Starbucks Stock

The question is whether a “reasonable” price really is compelling. It’s tough to make that case at these levels and with the risks ahead. China already accounts for over 20% of Starbucks locations.

That figure should rise to 30%+ over the next four years. That traditionally tea-focused market has to embrace coffee and embrace an American brand in the middle of a trade war.

Starbucks’ generally higher wages do insulate it somewhat from minimum wage hikes in the U.S. But labor inflation remains a potential concern.

Same-store sales have to accelerate after going in the wrong direction for several years. The U.S. economy probably has to cooperate: in a recession, consumers might downgrade to cheaper products from McDonald’s (NYSE:MCD) or other rivals. And the U.S. stock market probably has to hold up: even SBUX stock probably isn’t getting a 23x P/E multiple in a bear market.

There’s simply a lot that can go wrong here or at least not go quite as right as Starbucks hopes. At 24x FY19 EPS, few of those risks look priced in.

As of this writing, Vince Martin has no positions in any securities mentioned.