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1. Company Snapshot

1.a. Company Description

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide.The company operates through three segments: North America, International, and Channel Development.Its stores offer coffee and tea beverages, roasted whole beans and ground coffees, single serve products, and ready-to-drink beverages; and various food products, such as pastries, breakfast sandwiches, and lunch items.


The company also licenses its trademarks through licensed stores, and grocery and foodservice accounts.The company offers its products under the Starbucks, Teavana, Seattle's Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi brands.As of October 3, 2021, it operated 16,826 company-operated and licensed stores in North America; and 17,007 company-operated and licensed stores internationally.


The company was founded in 1971 and is based in Seattle, Washington.

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1.b. Last Insights on SBUX

Starbucks' recent performance has been driven by early success in its turnaround strategy, posting its first global comp sales growth in seven quarters. The company's Q4 results reflected progress in its turnaround plan, beverage innovation, and cost pressures. Analysts expect 2026 to be a pivotal year, with CEO Brian Niccol's efforts bearing fruit. Starbucks is also closing underperforming cafes to improve margins and unit-level profitability. Institutional investors, such as Gateway Investment Advisers LLC, have increased their stake in the company. According to Marketbeat, analysts have given Starbucks an average rating of "Hold".

1.c. Company Highlights

2. Starbucks' Turnaround Strategy Gains Traction

Starbucks reported a 5% growth in global revenue to $9.9 billion in Q1, with global comparable store sales accelerating to 4% growth. The company's operating margin was 10.1%, and EPS was $0.56, which was slightly below estimates of $0.586. North America revenue grew 3% to $7.3 billion, driven by a 4% increase in comparable store sales. International revenue grew 10% to $2.1 billion, with comps in nine of the company's 10 largest international markets.

Publication Date: Feb -02

📋 Highlights
  • Global Revenue Growth: Starbucks reported $9.9 billion in Q1 revenue, a 5% increase from the prior year, driven by 4% global comparable store sales growth.
  • International Segment Outperformance: International revenue surged 10% to $2.1 billion, with comp growth in nine of ten largest markets, outpacing the 3% North America growth to $7.3 billion.
  • Margin Pressure and EPS Decline: Consolidated operating margin contracted 180 basis points to 10.1%, with North America margins dropping 420 bps year-over-year, leading to a 19% decline in EPS to $0.56.
  • Turnaround Plan Progress: The "Back to Starbucks" initiative includes 128 new global stores, Green Apron service standard adoption, and a 25–30% menu reduction focused on health/wellness platforms.
  • Cost-Savings and Guidance: The company aims to cut $2 billion in costs over two years and projects 3%+ global comp sales growth in FY2026, with EPS guidance of $2.15–$2.40, reflecting margin recovery in the back half of the year.

Revenue Growth Drivers

The company's revenue growth was driven by a combination of factors, including the successful implementation of its "Back to Starbucks" plan, which focuses on improving the customer experience, overhauling marketing and menu innovation, and scaling its coffeehouse uplift program. According to Brian R. Niccol, "a strong operating foundation makes all the other initiatives that much more effective." The company's efforts to simplify its menu and introduce new products, such as its protein platform, have also contributed to revenue growth.

Margin Performance

Consolidated operating margin was 10.1%, contracting 180 basis points from the prior year, primarily due to investments in support of the "Back to Starbucks" plan. North America's operating margins declined by approximately 420 basis points year over year. However, the company expects consolidated operating margins to grow slightly year over year, driven by improvements in the back half of the year.

Valuation Metrics

With a P/E Ratio of 76.44 and an EV/EBITDA of 25.72, the market appears to be pricing in significant growth expectations for Starbucks. The company's ROE is currently negative at -17.22%, but its ROIC is 6.75%. Analysts estimate next year's revenue growth at 5.6%, which may be achievable given the company's momentum and strategic initiatives.

Future Outlook

Starbucks expects 3% or better global comp sales growth in fiscal 2026, led by 3% or better comp sales in the U.S. The company is confident in its ability to deliver consistent, profitable growth in its international business longer term. With its "Back to Starbucks" plan gaining traction and a focus on cost savings, Starbucks is well-positioned for future growth.

3. NewsRoom

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Starbucks' investor group urges shareholders to replace directors over labor row

Feb -18

Source: reuters.com

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Starbucks investor group gears up for board fight over backsliding labor relations

Feb -18

Source: businessinsider.com

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Cercano Management LLC Sells 306,486 Shares of Starbucks Corporation $SBUX

Feb -18

Source: defenseworld.net

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Starbucks Corporation $SBUX Shares Sold by Drucker Wealth 3.0 LLC

Feb -18

Source: defenseworld.net

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Steve Mandel's Strategic Moves: Meta Platforms Inc. Exit Impacts Portfolio by -7.07%

Feb -17

Source: gurufocus.com

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Aberdeen Group plc Sells 7,223 Shares of Starbucks Corporation $SBUX

Feb -16

Source: defenseworld.net

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Worried About AI Stock Prices? This Beaten-Down Alternative Is Potentially the Smarter Bet

Feb -15

Source: fool.com

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Caprock Group LLC Invests $1.83 Million in Starbucks Corporation $SBUX

Feb -14

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.50%)

6. Segments

North America

Expected Growth: 6.3%

Starbucks' strong brand recognition, increasing demand for premium coffee, and strategic store expansion in the US and Canada will drive growth.

International

Expected Growth: 6.3%

Starbucks International's growth is driven by increasing demand for premium coffee, expanding presence in emerging markets, and strategic partnerships to enhance customer experience.

Channel Development

Expected Growth: 10.4%

Starbucks' Channel Development segment is poised for growth, driven by expanding digital platforms, strategic retail store openings, and increasing penetration in the grocery channel, all of which will enhance customer reach and drive sales.

Corporate and Other

Expected Growth: 4.1%

Starbucks' headquarters and support centers will drive growth through strategic planning, cost savings initiatives, and investments in digital transformation, supply chain optimization, and employee development.

7. Detailed Products

Beverages

Starbucks offers a wide range of hot and cold beverages, including coffee, tea, iced coffee, Refreshers, and seasonal offerings.

Coffee

Starbucks sources high-quality Arabica coffee beans from around the world and roasts them in-house to bring out the unique flavors and aromas.

Food

Starbucks offers a variety of baked goods, sandwiches, salads, and snacks, including healthy and indulgent options.

Merchandise

Starbucks sells a range of branded merchandise, including mugs, tumblers, and accessories.

Gift Cards

Starbucks offers digital and physical gift cards that can be used to purchase Starbucks products and experiences.

Starbucks Rewards

Starbucks Rewards is a loyalty program that rewards customers for their purchases and offers personalized benefits and offers.

Mobile Order and Pay

Starbucks offers a mobile ordering and payment service that allows customers to order and pay for their drinks and food ahead of time.

8. Starbucks Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Starbucks faces moderate threat from substitutes such as tea, juice, and other beverages. However, the company's strong brand loyalty and customer experience help to mitigate this threat.

Bargaining Power Of Customers

Starbucks customers have low bargaining power due to the company's strong brand and limited alternatives. However, the company's customer-centric approach helps to maintain customer loyalty.

Bargaining Power Of Suppliers

Starbucks has a diversified supply chain and long-term contracts with suppliers, reducing the bargaining power of suppliers. The company's scale and global presence also give it negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the coffee shop industry, including high startup costs and the need for a strong brand and supply chain.

Intensity Of Rivalry

The coffee shop industry is highly competitive, with many established players and a high level of rivalry. Starbucks competes with other coffee chains, as well as independent coffee shops and cafes.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 148.15%
Debt Cost 3.95%
Equity Weight -48.15%
Equity Cost 8.76%
WACC 1.63%
Leverage -307.70%

11. Quality Control: Starbucks Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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McDonald's

A-Score: 6.0/10

Value: 3.6

Growth: 4.7

Quality: 6.5

Yield: 4.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Yum!

A-Score: 5.9/10

Value: 4.0

Growth: 4.7

Quality: 6.4

Yield: 4.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

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PulteGroup

A-Score: 5.8/10

Value: 6.0

Growth: 8.8

Quality: 7.7

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

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Booking

A-Score: 5.8/10

Value: 3.6

Growth: 8.7

Quality: 8.0

Yield: 1.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

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Starbucks

A-Score: 5.0/10

Value: 3.3

Growth: 5.6

Quality: 4.5

Yield: 5.0

Momentum: 4.0

Volatility: 7.3

1-Year Total Return ->

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Chipotle Mexican Grill

A-Score: 3.8/10

Value: 1.2

Growth: 8.4

Quality: 5.9

Yield: 0.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

95.76$

Current Price

95.76$

Potential

0.00%

Expected Cash-Flows