SBUX  Starbucks Corporation

Exchange

NASDAQ

Sector

Consumer Services

Industry

Restaurants

Market Cap.

79.26B

Vuru Grade

56.91/100

Current Price

$54.89
-0.06 (-0.11%)

Growth Price

$29.66
Overvalued by 45.96%

Stability Price

$10.74
Overvalued by 80.44%

Company Metrics

  • P/E 27.71
  • P/S 3.54
  • P/B 13.59
  • EPS 1.98
  • Cash ROIC 29.86%
  • Cash Ratio 0.50
  • Dividend 1 / 1.82%
  • Avg. Vol. 9.85M
  • Shares 1.44B
  • Market Cap. 79.26B

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 Still Not Cheap At $53
Seeking Alpha - Sep 10, 2017
A seemingly cheap price can lead to even cheaper prices. Don't get fooled by the new lows. Irrespective to the improvements made in recent years, Starbucks has shows that its stores struggle meaningfully in industry downturns. The company is still in a ...
Starbucks Is Getting Attractive
Seeking Alpha - Aug 28, 2017
One company that is getting a lot of attention it doesn't want is Starbucks (NASDAQ: SBUX). Instead of headlines about growth in China and the success story of revenue growth in the United States, the news is suddenly dominated by a declining stock, ...
What the Chart Means for Starbucks Corporation (SBUX) - Economic News
These two are the must watch stock's for the fearless investors: Starbucks ... - StockNewsJournal
Starbucks: I'm Still A Bit Concerned, But The Price Is Worth The Risk
Seeking Alpha - Sep 22, 2017
In my last article, one of the most significant arguments from readers is that the above signifies a period of transition for Starbucks. The company is gradually transitioning from a growth-oriented stock to that of a “cash cow”, or a highly stable ...
Is It Time to go for Starbucks Corporation (SBUX), Sprint Corporation (S)? - StockNewsJournal
What do Insider Trends Have to Say About Starbucks Corporation (SBUX)? - NY Stock News
Will The Fall Season Add (Pumpkin) Spice To Starbucks' Earnings?
Seeking Alpha - Sep 14, 2017
While Starbucks' third quarter performance was record-setting, Wall Street was worried by its less-than-expected same-store sales.
Starbucks: Dividend Future
Seeking Alpha - Sep 14, 2017
In my most recent piece related to Starbucks (NASDAQ:SBUX), I took a deeper dive into the company's year-to-date performance and some of its potential growth drivers going forward.
Starbucks: Is The Pullback A Buying Opportunity?
Seeking Alpha - Sep 2, 2017
Starbucks' (SBUX) stock had fallen as much as 18% from its highs of $64.57 reached on June 2, 2017. Investors appears to be concerned about the company's decelerated growth rate. However, the company has a few initiatives in place to improve its ...
Why Investors remained confident on Starbucks Corporation (SBUX), Axalta ...
StockNewsJournal - Sep 25, 2017
ROI deals with the invested cash in the company and the return the investor realize on that money based on the net profit of the business.
Contrasting Starbucks Corporation (SBUX) and Its Competitors
The Ledger Gazette - 16 hours ago
Starbucks Corporation (NASDAQ: SBUX) is one of 44 public companies in the “Restaurants & Bars” industry, but how does it weigh in compared to its rivals?
Know before you buy this stock: Starbucks Corporation (SBUX) - The News Journal
Starbucks Corporation (SBUX): Examining the Technicals - Economic News
Is Starbucks A Bargain Around Its 2-Year Lows?
Seeking Alpha - Sep 7, 2017
Starbucks (SBUX) has lost 15% in the last 3 months and is now trading near its 2-year low. Throughout the history of the stock, such a correction has always proven a great investing opportunity.
Starbucks: I'm Getting A Little Nervous
Seeking Alpha - Aug 29, 2017
However, sales and operating margins in developed markets such as EMEA have been slowing very significantly. Attempting to increase revenues simply by building new stores is not a sustainable strategy.
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.

$54.89 Current Price

$29.66 Growth Price (DCF)

Overvalued by 45.96%


Growth Rate Assumed by Market: 31.30%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$10.74 Stability Price (EPV)

Overvalued by 80.44%


Discount Rate: 15.0%

$35.42 Book Price

Overvalued by 35.47%


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.