SBUX  Starbucks Corporation

Exchange

NASDAQ

Sector

Consumer Services

Industry

Restaurants

Market Cap.

87.53B

Vuru Grade

56.91/100

Current Price

$60.06
-1.24 (-2.02%)

Growth Price

$29.39
Overvalued by 51.06%

Stability Price

$10.64
Overvalued by 82.29%

Company Metrics

  • P/E 30.8
  • P/S 4.12
  • P/B 15.41
  • EPS 1.95
  • Cash ROIC 29.86%
  • Cash Ratio 0.50
  • Dividend 0.9 / 1.46%
  • Avg. Vol. 10.01M
  • Shares 1.46B
  • Market Cap. 87.53B

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 Delivers Record Earnings, but 1 Important Metric Is ...
Motley Fool - Apr 28, 2017
Starbucks Corporation (NASDAQ:SBUX) reported its second-quarter financial results on April 27, and it delivered a venti-sized portion of revenue and earnings per share, both of which were the best ever for a single quarter in the company's history.
Analysts defend long-term Starbucks thesis - Seeking Alpha
Starbucks' Teavana Shows Troubling Metrics - Benzinga
Starbucks Corporation is brewing up a comeback
AOL Small Business - Apr 21, 2017
Starbucks Corporation (ticker: SBUX) stock has lagged many of its large-cap restaurant peers in the past year, but the company's recent struggles may soon be over.
Starbucks Corporation surged in the Previous Trading Session with the Change ... - Free Observer
Why Starbucks Corporation (NASDAQ:SBUX) Stock Is A Long-Term Value Investment
BNL Finance (press release) (registration) (blog) - Apr 29, 2017
Starbucks Corporation (NASDAQ:SBUX) is more than just a coffee shop restaurant, it is an experience. When customers pay their $3-6 for a coffee, tea or iced drink, they are paying for more than a drink.
Lookout for Price Target? Plug Power Inc. (PLUG), Starbucks Corporation (SBUX) - StockNewsJournal
Analyst provided some recent clues on Starbucks Corporation (SBUX) and GRUBHUB ... - USA Commerce Daily
Starbucks: Sell
Seeking Alpha - Apr 28, 2017
Some management teams hate such events because they simply want to work on their business, while others (Starbucks is one of them) seem to enjoy the attention and the possibility to reach a broad audience to boost the company's stock price.
Why Starbucks Corporation (SBUX) Stock Is Running Out of Air - Investorplace.com
Is Starbucks Corporation (NASDAQ:SBUX) The Best Large-Cap Pick? - Library For Smart Investors
Why Starbucks Corporation Shareholders Have Nothing to Worry About
Motley Fool - Apr 4, 2017
That has sometimes been the case with Starbucks (NASDAQ:SBUX) when a small negative, a bad piece of data, or sometimes even a good piece of data comes out, and that becomes the story, sending the chain's stock price down.
Earnings Reaction History: Starbucks Corporation, 40.0% Follow-Through ...
Nasdaq - Apr 27, 2017
Starbucks Corporation ( SBUX ) is due to issue its quarterly earnings report in the upcoming extended-hours session. Given its history, traders can expect very active trading in the issue immediately following its quarterly earnings announcement ...
GoPro Inc Posts In-Line Losses, Starbucks Corporation Earnings In Line, Sales Miss
ValueWalk - Apr 27, 2017
GoPro and Starbucks released their latest earnings reports after closing bell tonight. GoPro reported adjusted losses of 44 cents per share on $218.6 million, compared to the analyst estimates of 44 cents per share in losses and $208 million in revenue ...
Friday's Vital Data: Microsoft Corporation (MSFT), Intel Corporation (INTC ...
Investorplace.com - Apr 28, 2017
U.S. stock futures are flat to higher this morning, as Wall Street digests another heavy helping of corporate earnings, with Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) headlining last night's ...
Starbucks: Buy On The Drop?
Seeking Alpha - Apr 28, 2017
Starbucks (NASDAQ:SBUX) is trending down 5% in after hours trading Thursday after the company reported second quarter earnings that failed to impress the market.
Starbucks Signals The Start Of A New Story
Seeking Alpha - Apr 19, 2017
Starbucks hasn't been just about coffee for years, but a recent move signals the company is now willing to experiment with just about anything.
Trade of the Day: Starbucks Corporation (SBUX) Stock Ready for a Magical Run - Investorplace.com
The Fabled Starbucks Unicorn Frappuccino: 'It's Like Watered-Down Cotton Candy' - Benzinga
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.

$60.06 Current Price

$29.39 Growth Price (DCF)

Overvalued by 51.06%


Growth Rate Assumed by Market: 33.81%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$10.64 Stability Price (EPV)

Overvalued by 82.29%


Discount Rate: 15.0%

$35.35 Book Price

Overvalued by 41.15%


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.