Starbucks Corp (NASDAQ: SBUX)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0000829224
Market Cap 95.51 Bn
P/B -11.80
P/E 51.45
P/S 2.57
ROIC (Qtr) 11.29
Div Yield % 3.65
Rev 1y % (Qtr) 5.46
Total Debt (Qtr) 26.61 Bn
Debt/Equity (Qtr) -3.29

About

Starbucks Corporation, known simply as Starbucks, is a prominent player in the global coffee industry, with its stock symbol SBUX. The company operates in 86 markets, serving a vast customer base through its unique blend of products and services. As a leading roaster, marketer, and retailer of specialty coffee, Starbucks has established a strong brand presence and a reputation for quality. Starbucks' main business activities revolve around the sale of coffee and related products. The company generates revenue through its company-operated and licensed...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 4.75B provides exceptional 15825x coverage of minority interest expenses 300000, showing strong core operations.
  • Operating cash flow of 4.75B provides strong 14.92x coverage of stock compensation 318.30M, indicating sustainable incentive practices.
  • Strong operating cash flow of 4.75B provides 1.81x coverage of SG&A expenses 2.62B, showing efficient operational cost management.
  • Cash position of 3.22B provides exceptional 10732.67x coverage of minority interest expenses 300000, indicating strong liquidity.
  • Tangible assets of 28.48B provide robust 5.38x coverage of other current liabilities 5.29B, indicating strong asset backing.

Bear case

  • Operating cash flow of 4.75B barely covers its investment activities of (2.49B), with a coverage ratio of -1.91, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 4.75B provides thin coverage of dividend payments of (2.77B) with a -1.71 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 3.22B provide limited coverage of acquisition spending of (177.10M), which is -18.18x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 4.75B provides insufficient coverage of deferred revenue obligations of 7.61B, which is 0.62x, raising concerns about future service delivery capabilities.
  • Operating earnings of 3.05B show weak coverage of depreciation charges of 1.77B, with a 1.72 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 222.05 Bn 26.39 8.45 55.82 Bn
2 SBUX Starbucks Corp 95.51 Bn 51.45 2.57 26.61 Bn
3 CMG Chipotle Mexican Grill Inc 50.94 Bn 33.15 4.32 4.98 Bn
4 YUM Yum Brands Inc 43.17 Bn 29.83 5.36 11.55 Bn
5 QSR Restaurant Brands International Inc. 22.43 Bn 24.33 2.42 15.64 Bn
6 DRI Darden Restaurants Inc 21.91 Bn 19.91 1.77 6.16 Bn
7 YUMC Yum China Holdings, Inc. 18.12 Bn 20.05 1.57 1.84 Bn
8 DPZ Dominos Pizza Inc 14.57 Bn 24.72 3.01 5.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.72 2.05
EV to Cash from Ops. EV/CFO 25.11 16.57
EV to Debt EV to Debt 4.48 4.75
EV to EBIT EV/EBIT 39.09 3.45
EV to EBITDA EV/EBITDA 26.73 9.76
EV to Free Cash Flow [EV/FCF] EV/FCF 48.82 29.06
EV to Market Cap EV to Market Cap 1.25 6.55
EV to Revenue EV/Rev 3.21 2.40
Price to Book Value [P/B] P/B -11.80 -1.40
Price to Earnings [P/E] P/E 51.45 13.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.67 -9.56
Dividend Payout Ratio % Div Payout % (Qtr) 149.70 18.72
Dividend per Basic Share Div per Share (Qtr) 2.44 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 113.49 30.41
Interest Coverage Int. cover (Qtr) 5.62 -86.85
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 16.99 -24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.02 35.50
Dividend Growth (1y) % Div 1y % (Qtr) 5.17 -0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -46.06 -564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -33.43 25.78
EBIT Growth (1y) % EBIT 1y % (Qtr) -44.86 -507.68
EBT Growth (1y) % EBT 1y % (Qtr) -49.54 -41.98
EPS Growth (1y) % EPS 1y % (Qtr) -50.90 -126.51
FCF Growth (1y) % FCF 1y % (Qtr) -26.40 5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 2.12 23.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.16 0.99
Cash Payout Ratio Cash Payout (Qtr) 0.39 0.07
Cash Ratio Cash Ratio (Qtr) 0.32 0.78
Current Ratio Curr Ratio (Qtr) 0.72 1.47
Debt to Equity Ratio Debt/Equity (Qtr) -3.29 0.05
Interest Cover Ratio Int Coverage (Qtr) 5.62 -86.85
Times Interest Earned Times Interest Earned (Qtr) 5.62 -86.85
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.00 7.71
EBIT Margin % EBIT Margin % (Qtr) 8.20 -2.27
EBT Margin % EBT Margin % (Qtr) 6.74 -1.97
Gross Margin % Gross Margin % (Qtr) 68.60 34.04
Net Profit Margin % Net Margin % (Qtr) 5.00 -3.69