Starbucks (SBUX) AI Stock Analysis

• Market Cap: $97.04B
• Dividend Yield: 2.79%
• Average Volume (3M): 12.00M
• Price to Earnings (P/E): 27.6
• Beta (1Y): 1.21
• Revenue Growth: -0.50%
• EPS Growth: -24.28%
• Country: US
• Employees: 361,000
• Sector: Consumer Cyclical
• Sector Strength: 59
• Industry: Restaurants
• EPS (TTM): 0.69
• Shares Outstanding: 1,135,900,000
• 10 Day Avg. Volume: 16,296,683
• 30 Day Avg. Volume: 11,996,319
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.05
• Price to Cash Flow (P/CF): 13.30
• P/FCF Ratio: 12.70
• Enterprise Value/Market Cap: 1.31
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 13.07
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $94.74
• Price Target Upside: 11.87% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

Starbucks' strong revenue growth and cash flow generation are key strengths, but high financial leverage and declining profitability margins present risks. The stock's technical indicators suggest a bearish trend, and its high valuation may limit upside potential. While strategic initiatives are promising, financial recovery is still in early stages, reflected in the earnings call. Overall, Starbucks presents a moderate investment opportunity with both potential and risks to consider.

Positive Factors

International performance

China and international markets showed a positive performance, with several key markets producing flat or positive same-store sales.

Operational improvements

Early indicators of a successful turnaround include 25% of stores exiting the quarter with positive transaction comparisons, and 75% of wait times being under four minutes in test stores.

Stock valuation

The stock is now trading at a valuation that has been at or close to a bottom in past challenging periods, suggesting potential stabilization.

Negative Factors

Earnings visibility

The recent stock price underperformance is due to lack of visibility on earnings, consumer uncertainty, and inflation potential of tariffs.

Financial performance

Margins and earnings per share missed expectations, leading to a cut in earnings estimates for future years.

Turnaround strategy

The fundamental turnaround will take longer than the market generally believes, with near-term complexities adding to risks.

Starbucks Business Overview & Revenue Model

Company Description

Starbucks Corporation, established in 1971 and headquartered in Seattle, Washington, operates as a premier roaster, marketer, and retailer of specialty coffee worldwide. The company operates in multiple sectors, primarily through its retail stores, but also includes licensed stores, consumer packaged goods, and foodservice. Its core products include coffee beverages, handcrafted drinks, merchandise, and fresh food items, alongside a variety of premium teas and other beverages under its diverse brand portfolio.

How the Company Makes Money

Starbucks makes money predominantly through the sale of beverages and food items in its company-operated stores, which account for a significant portion of its revenue. The company also generates revenue through licensed stores, where it receives a percentage of sales as royalty fees, and sells coffee products and other branded items through retail channels and foodservice accounts. Additionally, partnerships with other companies, like Nestlé for the global distribution of Starbucks branded products, contribute to its earnings by expanding its reach in the consumer packaged goods sector. Starbucks' loyalty program, Starbucks Rewards, also plays a crucial role in driving repeat business and customer engagement, further enhancing its revenue potential.

Starbucks Financial Statement Overview

Summary

Starbucks exhibits robust revenue growth and effective cash flow generation, supporting its operational and strategic initiatives. However, high leverage and declining net margins highlight potential financial risks. The company must focus on improving profitability and reducing financial leverage to enhance long-term stability. Overall, Starbucks remains a strong performer in the restaurant industry, with key areas for improvement in financial management.

Income Statement

Starbucks demonstrates strong revenue growth with a 12.7% increase in total revenue from 2022 to TTM (Trailing-Twelve-Months). The gross profit margin is robust at 36.5% for the TTM, indicating efficient cost management. However, the net profit margin has slightly decreased to 8.6% in TTM, reflecting potential challenges in controlling non-operating expenses. The EBIT margin is solid at 12.5%, but slightly down from previous periods, suggesting a need to enhance operational efficiency. Overall, the income statement shows a healthy top-line growth but slight pressure on profitability margins.

Balance Sheet

Starbucks’ balance sheet reflects high leverage with a negative stockholders' equity of $7.6 billion in TTM, indicating a debt-heavy capital structure. The debt-to-equity ratio is not calculable due to negative equity, emphasizing the financial risk. Despite this, the company maintains a stable asset base of $31.6 billion, demonstrating resilience. The equity ratio is negative, highlighting potential vulnerability. While Starbucks manages its assets well, the high leverage poses a significant risk to financial stability.

Cash Flow

Starbucks shows strong cash flow generation with operating cash flow of $5.28 billion in TTM and a healthy free cash flow of $3.06 billion. The free cash flow to net income ratio is high, indicating efficient cash conversion. However, a decline in operating cash flow compared to the previous year suggests the need for improved cash management. Despite minor fluctuations, the company's cash flow remains strong, supporting its operational needs and capital expenditure.

Breakdown
Sep 2024	Dec 2023	Dec 2022	Dec 2021	Sep 2020
Income Statement		Total Revenue
36.18B	35.98B	32.25B	29.06B	23.52B
	Gross Profit
9.71B	9.85B	8.37B	8.39B	5.06B
	EBIT
5.41B	5.87B	4.62B	4.87B	1.56B
	EBITDA
7.12B	7.40B	6.24B	7.35B	3.10B
	Net Income Common Stockholders
3.76B	4.12B	3.28B	4.20B	928.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.54B	3.95B	3.18B	6.62B	4.63B
	Total Assets
31.34B	29.45B	27.98B	31.39B	29.37B
	Total Debt
25.80B	24.60B	23.80B	23.61B	25.26B
	Net Debt
22.52B	21.05B	20.99B	17.15B	20.91B
	Total Liabilities
38.78B	37.43B	36.68B	36.71B	37.17B
	Stockholders Equity
-7.45B	-7.99B	-8.71B	-5.32B	-7.81B
Cash Flow		Free Cash Flow
3.32B	3.68B	2.56B	4.52B	114.20M
	Operating Cash Flow
6.10B	6.01B	4.40B	5.99B	1.60B
	Investing Cash Flow
-2.70B	-2.27B	-2.15B	-319.50M	-1.71B
	Financing Cash Flow
-3.72B	-2.99B	-5.64B	-3.65B	1.71B

Starbucks Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 84.69
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBUX, the sentiment is Negative. The current price of 84.69 is above the 20-day moving average (MA) of 83.02, below the 50-day MA of 95.02, and below the 200-day MA of 94.38, indicating a neutral trend. The MACD of -3.14 indicates Negative momentum. The RSI at 45.56 is Neutral, neither overbought nor oversold. The STOCH value of 65.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SBUX.

Starbucks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TXRH	77 Outperform	$10.64B	24.75	34.69%	1.46%	16.01%	42.54%
MCD	76 Outperform	$223.07B	27.39	-216.57%	2.21%	-0.22%	―
YUMC	76 Outperform	$16.51B	18.47	15.73%	1.63%	2.79%	19.36%
BROS	71 Outperform	$9.97B	177.98	7.82%	―	32.64%	943.64%
YUM	68 Neutral	$40.38B	27.81	-19.43%	1.82%	10.09%	-11.50%
SBUX	64 Neutral	$97.04B	27.61	-47.07%	2.79%	-0.50%	-24.28%
Sector *	61 Neutral	$6.65B	11.71	3.09%	3.98%	2.65%	-20.82%

Starbucks Corporate Events

Starbucks Appoints Cathy Smith as New CFO

On March 4, 2025, Starbucks announced the appointment of Cathy R. Smith as the new executive vice president and chief financial officer, succeeding Rachel Ruggeri, who will be leaving the company. Cathy Smith, with extensive experience in retail and global operations from her previous roles at Nordstrom, Target, and Walmart International, is expected to contribute significantly to Starbucks’ strategic initiatives, including the ‘Back to Starbucks’ plan. Her compensation package includes a base salary, cash incentives, and equity awards to align her with the company’s long-term goals.