SBUX  Starbucks Corporation

Exchange

NASDAQ

Sector

Consumer Services

Industry

Restaurants

Market Cap.

84.66B

Vuru Grade

56.91/100

Current Price

$58.46
+0.44 (+0.76%)

Growth Price

$29.58
Overvalued by 49.40%

Stability Price

$10.70
Overvalued by 81.69%

Company Metrics

  • P/E 28.91
  • P/S 3.82
  • P/B 14.98
  • EPS 2.02
  • Cash ROIC 29.86%
  • Cash Ratio 0.50
  • Dividend 1 / 1.72%
  • Avg. Vol. 7.90M
  • Shares 1.45B
  • Market Cap. 84.66B

Company Description

Starbucks Corporation purchases and roasts whole bean coffees. It operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. The company offers approximately 30 blends and single-origin premium arabica coffees. It also provides handcrafted beverages, such as fresh-brewed coffee, hot and iced espresso beverages, coffee and non-coffee blended beverages, ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Starbucks Corporation Earnings: What to Watch
Motley Fool - 11 hours ago
Starbucks' 17.7% operating margin was a second-quarter record for the company and marked a solid improvement over the prior year's 17.3%.
Starbucks Moves Sideways - Seeking Alpha
Somewhat Positive Media Coverage Somewhat Unlikely to Affect Starbucks ... - BNB Daily (blog)
Better Buy: Starbucks Corporation vs Dunkin Donuts
Motley Fool - Jul 11, 2017
If you're looking for a quick caffeine fix in the United States, you're probably never too far away from either a Starbucks (NASDAQ:SBUX) or Dunkin Donuts. Both coffee slingers have set up shops on thousands of corners and strip malls throughout the ...
Finding Support And Resistance On A Chart: Dunkin' Brands Group, Inc. (DNKN ... - AllStockNews
Its time to give a fresh look to Dunkin' Brands Group, Inc. (DNKN) and ... - USA Commerce Daily
5 Things You Didn't Know About Starbucks Corporation
Motley Fool - Jul 2, 2017
Starbucks gets 8% of revenue from its packaged goods segment that includes branded coffee, tea, and single-serve drinks that the company sells through grocery stores and other retailers. That percentage of revenue has held steady over the past few ...
Starbucks Corporation (NASDAQ:SBUX) Stake Held By Ausdal Financial Partners - Insider Tradings
Buy or Sell? Average Brokerage Ratings on Starbucks Corp. (SBUX), JetBlue ... - StockNewsJournal
Better Buy: Starbucks Corporation vs. PepsiCo
Motley Fool - Jul 7, 2017
However, the two companies otherwise embody the opposite poles of the global beverage industry. Starbucks is a lifestyle brand.
Starbucks Corporation (SBUX) Stock Is a Very Nice Brew for Bulls - Investorplace.com
Put-Call Ratio Says A Bounce Coming For Starbucks Corporation (SBUX) - StockNews.com (blog)
Is Starbucks Growing Too Quickly?
Seeking Alpha - Jul 10, 2017
However, in the course of learning more about Starbucks (SBUX), I decided to read long-time CEO Howard Schultz' book Onward, describing the company's great fall and eventual recovery during the 2007-09 period. Given the current parallels between the ...
Starbucks: Right Where You Want It
Seeking Alpha - Jul 17, 2017
Starbucks' breakout above $64 was related to rumors that comparative same store sales were strong and that the company had made necessary changes to improve customer throughput. However, the June pullback began after there were whispers that ...
Today's Brokerage Rating: Starbucks Corporation (SBUX), Amicus Therapeutics ... - StockNewsJournal
Trading Volatility: Option Trading Before Earnings in Starbucks Corporation - CML News
Starbucks: What Are The Risk Factors?
Seeking Alpha - Jul 14, 2017
In previous articles, I have cited SBUX's dominant position in its market and expanding sales growth in emerging markets as key drivers of success for this company going forward. However, while the feedback on Starbucks is generally positive, it is ...
Starbucks Corporation (NASDAQ:SBUX) Earning Somewhat Positive Media Coverage ... - BNB Daily (blog)
Starbucks Corporation - Receive News & Ratings Daily - The Cerbat Gem
Starbucks: Time To Buy?
Seeking Alpha - Jul 4, 2017
Starbucks' strategy of shifting to a licensed store model from company-operated stores helped company grow its store footprint more rapidly, while allowing it to expand its underlying operating margin.
Starbucks: Is Now The Time To Buy?
Seeking Alpha - Jun 30, 2017
Coffee giant Starbucks Corporation (NASDAQ:SBUX). I'm not sure what they put in this stuff. Cocaine? Nicotine? Whatever it is, I can't start my morning without a stop at the nearest cafe.
This Is Why Starbucks Corporation (SBUX) Stock Is Just Getting Started - Investorplace.com
Starbucks Corporation (SBUX) K-Cup Category Sales Growth Remains Sluggish - Smаrt Stоck Nеws
Starbucks: A Future American Icon
Seeking Alpha - Jun 29, 2017
If Starbucks continues to grow internationally, they will become an American Icon, as recognizable as McDonald's and Coke.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for SBUX to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate SBUX's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$58.46 Current Price

$29.58 Growth Price (DCF)

Overvalued by 49.40%


Growth Rate Assumed by Market: 32.97%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$10.70 Stability Price (EPV)

Overvalued by 81.69%


Discount Rate: 15.0%

$35.42 Book Price

Overvalued by 39.41%


Varying Cash Return on Invested Capital over the past 5 years

SBUX has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. However, there is a substantial variation in their Cash ROIC from year-to-year. This company may have unreliable free cash flow or operates in a business where invested capital costs increase substantially on a sporadic basis. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

SBUX has created $29.86 of cash for every $100 invested.
Figures in USD. Fiscal year ends in September
20122013201420152016
Free Cash Flow 894.10M 1.76B -553.10M 2.45B 3.13B
divided by
Invested Capital 3.97B 2.91B 5.87B 7.18B 7.52B
Cash ROIC 22.51% 60.47% -9.42% 34.05% 41.69%

Excellent Return on Equity over the past 5 years

Over the past 5 years, SBUX has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

SBUX has generated $32.37 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in September
20122013201420152016
Net Income 1.38B 8.80M 2.07B 2.76B 2.82B
divided by
Stockholders' Equity 5.11B 4.48B 5.27B 5.82B 5.88B
Return on Equity 27.10% 0.20% 39.22% 47.43% 47.91%

Excellent Business Performance over the past 10 years

SBUX has been able to maintain profitability in good times and bad. This could mean SBUX has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

SBUX has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Free Cash Flow 250.87M 274.20M 943.40M 1.26B 1.08B 894.10M 1.76B -553.10M 2.45B 3.13B

Weak Balance Sheet

SBUX's financial position is not ideal. The key is to check whether SBUX is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Cash 438.69M 322.30M 666.10M 1.45B 2.05B 2.04B 3.23B 1.84B 1.61B 2.26B
Current Assets 1.70B 1.75B 2.04B 2.76B 3.79B 4.20B 5.47B 4.17B 4.35B 4.76B
Total Assets 5.34B 5.67B 5.58B 6.39B 7.36B 8.22B 11.52B 10.75B 12.45B 14.33B
Current Liabilities 2.16B 2.19B 1.58B 1.78B 2.08B 2.21B 5.38B 3.04B 3.65B 4.55B
Total Liabilities 3.06B 3.18B 2.53B 2.71B 2.98B 3.11B 7.04B 5.48B 6.63B 8.45B
Stockholder' Equity 2.28B 2.49B 3.05B 3.67B 4.38B 5.11B 4.48B 5.27B 5.82B 5.88B
Current Ratio 0.79 0.80 1.29 1.55 1.83 1.90 1.02 1.37 1.19 1.05
TL-to-TA 0.57 0.56 0.45 0.42 0.40 0.38 0.61 0.51 0.53 0.59

Consistent Reinvestment of Profits over the past 10 years

SBUX has consistently retained profits. This may put SBUX in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, SBUX can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Retained Earnings 2.19B 2.40B 2.79B 3.47B 4.30B 5.05B 4.13B 5.21B 5.97B 5.95B
Retained Earnings Growth - 9.73% 16.27% 24.27% 23.80% 17.42% -18.15% 26.06% 14.75% -0.42%

Competitive Industry over the past 10 years

SBUX is likely operating in an industry with medium to low barriers to entry. This may mean that SBUX doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that SBUX invests heavily in R&D and Sales, General & Administrative expenses.

Only $8.43 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Net Income 672.64M 315.50M 390.80M 945.60M 1.25B 1.38B 8.80M 2.07B 2.76B 2.82B
divided by
Revenue 9.41B 10.38B 9.77B 10.71B 11.70B 13.30B 14.89B 16.45B 19.16B 21.32B
Net Profit Margin 7.15% 3.04% 4.00% 8.83% 10.65% 10.41% 0.06% 12.57% 14.40% 13.22%

Strong Pricing Power over the past 10 years

SBUX has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$50.55 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Gross Profit 2.20B 1.99B 5.45B 6.25B 6.75B 7.49B 8.51B 9.59B 11.38B 12.80B
divided by
Revenue 9.41B 10.38B 9.77B 10.71B 11.70B 13.30B 14.89B 16.45B 19.16B 21.32B
Gross Margin 23.34% 19.19% 55.75% 58.36% 57.70% 56.29% 57.14% 58.30% 59.36% 60.07%

High Capital Intensity over the past 10 years

SBUX spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

1,397.41% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Capital Expenditure 1.08B 984.50M 445.60M 440.70M 531.90M 856.20M 1.15B 1.16B 1.30B 1.44B
divided by
Net Income 672.64M 315.50M 390.80M 945.60M 1.25B 1.38B 8.80M 2.07B 2.76B 2.82B
Capital Expenditure Ratio 160.61% 312.04% 114.02% 46.61% 42.70% 61.83% 13,081.82% 56.14% 47.25% 51.09%

Strong Dividend History over the past 10 years

SBUX has consistently distributed a dividend for the past 7 years. This suggests SBUX is established and will likely continue to distribute its dividend for the foreseeable future.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Dividend Paid - - - 171.00M 389.50M 513.00M 628.90M 783.10M 928.60M 1.18B
divided by
Shares Outstanding 770.09M 741.70M 745.90M 764.20M 769.70M 773.00M 762.30M 763.10M 1.51B 1.49B
Dividend Paid Per Share - - - 0.22 0.51 0.66 0.83 1.03 0.61 0.79
Price at Year End 19.49 9.06 22.57 31.81 45.85 52.64 78.55 81.80 60.82 55.52
Dividend Yield - - - 0.70% 1.10% 1.26% 1.05% 1.25% 1.01% 1.43%

History of Stock Buybacks over the past 10 years

SBUX has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Shares Outstanding 770.09M 741.70M 745.90M 764.20M 769.70M 773.00M 762.30M 763.10M 1.51B 1.49B
Stock Bought Back - 3.83% -0.56% -2.39% -0.71% -0.43% 1.40% -0.10% -49.58% 1.80%
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Discussion
Sort By:
1
Posted by wsb556  (on December 11, 2012)
2013 is going to be a big year for SBUX if prospective growth in China is accurate.
1
Posted by Alexleroi  (on December 13, 2012)
I'm currently in China. SBUX is indeed getting into each and every city on the map. One dangerous thing to watch out: the skyrocketing rents and wages! The Middle Kingdoms (China) are no longer an "inexpensive" place to do business. In 5 years, average operating costs in China will reach 2/3 of US. The gov'ts here love Keynesian approach way too much. Indeed, they've got more knowledge than Japs on how to stimulate economy. One side effect is declining ROIC and skyrocketing costs for each and every business. Besides, Chinese have a lot more past time than just sitting there with an Americano in SBUX. Better take SBUX's projections with a grain of a salt.
1
Posted by guiding.god  (on December 24, 2012)
great points here, thanks
1
Posted by pbanik  (on October 5, 2012)
@cvho123456789
http://financials.morningstar.com/income-statement/is.html?t=SBUX&region=USA&culture=en-US
They're growing, but based on their growth rate, I think they're overpriced. They're trading over 27 times earnings, but if they're trading at that price multiple, they should be growing at least 27%.
I think if a stock has a P/E multiple of 1, they should be at least growing net income at 1% annually. If they have a price multiple of 1000, they should be having at least 1000% increase in income.

@Cameron Looking at their income statement, I think a 20% growth rate based on net income is probably more realistic.
1
Posted by cvho123456789  (on October 2, 2012)
เศรษฐกิงแย่มากๆๆๆๆ
1
Posted by Cameron  (on March 20, 2012)
A 30% growth rate is not unreasonable for SBUX. Although the growth rate for the growth price is capped at 15%, this might be worth a second look. They sure aren't going anywhere soon.