February 28, 2016
NASDAQ: SBUX
STARBUCKS CORP
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$0.80
B-
C+
C
Annual Dividend Yield
1.36%
SELL
C-
D+
D
Beta
0.77
Sector: Consumer Goods & Svcs
SBUX BUSINESS DESCRIPTION
Starbucks Corporation operates as a roaster,
marketer, and retailer of specialty coffee
worldwide. The company operates in four
segments: Americas; Europe, Middle East, and
Africa; China/Asia Pacific; and Channel
Development.
Weekly Price: (US$)
D-
E+
E
E-
F
Market Capitalization
$86.8 Billion
Sub-Industry: Restaurants
SMA (50)
BUY
52-Week Range
$42.05-$64.00
RATING SINCE
TARGET PRICE
02/25/2014
$77.11
Price as of 2/25/2016
$58.75
Source: S&P
SMA (100)
1 Year
2 Years
80
TARGET
TARGET
TARGETPRICE
PRICE$77.11
$77.11
PRICE
$77.11
TARGET
75
70
65
60
55
STOCK PERFORMANCE (%)
3 Mo.
Price Change
-5.54
50
1 Yr.
24.65
3 Yr (Ann)
30.22
12 Mo.
15.99
-1.96
-1.22
3 Yr CAGR
13.05
19.74
20.57
45
40
GROWTH (%)
35
Last Qtr
11.87
-30.08
-29.24
Revenues
Net Income
EPS
RETURN ON EQUITY (%)
SBUX
Q1 2016
41.15
Q1 2015
43.47
Q1 2014
2.38
Ind Avg
24.45
39.72
22.46
S&P 500
12.28
14.59
13.97
30
Rating History
BUY
Volume in Millions
100
50
2014
2015
0
2016
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
RECOMMENDATION
We rate STARBUCKS CORP (SBUX) a BUY. This is based on the convergence of positive investment
measures, which should help this stock outperform the majority of stocks that we rate. The company's
strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely
solid financial position with reasonable debt levels by most measures, solid stock price performance and
notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in
net income.
P/E COMPARISON
36.04
29.30
21.53
SBUX
Ind Avg
S&P 500
EPS ANALYSIS¹ ($)
HIGHLIGHTS
Despite its growing revenue, the company underperformed as compared with the industry average of 13.2%.
Since the same quarter one year prior, revenues rose by 11.9%. This growth in revenue does not appear to
have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Net operating cash flow has increased to $1,636.00 million or 14.79% when compared to the same quarter last
year. In addition, STARBUCKS CORP has also vastly surpassed the industry average cash flow growth rate of
-53.51%.
2014
2015
Q1 0.46
Q4 0.43
Q3 0.41
Q2 0.33
Q1 0.65
Q4 0.39
Q3 0.34
Q2 0.28
Q1 0.36
The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been
successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio
of 0.71 is somewhat weak and could be cause for future problems.
2016
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
STARBUCKS CORP's earnings per share declined by 29.2% in the most recent quarter compared to the same
quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised
for EPS growth in the coming year. During the past fiscal year, STARBUCKS CORP increased its bottom line by
earning $1.82 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($1.89
versus $1.82).
Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also
clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings
results. The stock's price rise over the last year has driven it to a level which is somewhat expensive
compared to the rest of its industry. We feel, however, that other strengths this company displays justify
these higher price levels.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NASDAQ: SBUX
STARBUCKS CORP
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.36%
PEER GROUP ANALYSIS
250%
QSR
V
FA
AB
OR
-50%
DNKN
LE
AB
Revenue Growth (TTM)
LE
R
VO
FA
SBUX
5%
55%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $3.5 Billion and $108.7 Billion.
Companies with NA or NM values do not appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
REVENUE GROWTH AND EARNINGS YIELD
250%
52-Week Range
$42.05-$64.00
Price as of 2/25/2016
$58.75
The foodservice industry employs more than 12 million people, making it America’s second largest employer
after the U.S. government. Not only is the industry huge, it’s growing, as factors - such as a rise in
two-income households - have been leading to increasing levels of dining out. In recent years, restaurant
sales have risen roughly 5% annually according to National Restaurant Association estimates. However,
despite its growth rate, the industry should be seen as mature. Companies within the industry generally earn
thin margins and face stiff competition. As a result, M&A activity is frequent as competitors look to spread
fixed costs across more locations.
UN
ARMK
CMG
PNRA
CBRL
DPZ
YUM
Market Capitalization
$86.8 Billion
INDUSTRY ANALYSIS
The hotels, restaurant, and leisure industry consists of hotels, restaurants, casinos, cruise lines, resorts, and
theme parks. Demand is driven by a fairly consistent group of factors throughout the whole of the industry:
personal income levels, total employment, and consumer confidence. In recent years, catastrophic weather,
fear of terrorism, and health epidemics directly impacted the industry in a material way. The industry is
capital, marketing, personnel, energy, maintenance, and technology intensive. Major players include
Intercontinental Hotels Group (IHG), Marriott International Inc. (MAR), Las Vegas Sands (LVS), MGM Resorts
International (MGM), McDonald’s (MCD), and Yum! Brands (YUM).
REVENUE GROWTH AND EBITDA MARGIN*
DRI
Beta
0.77
QSR
Both tourism and business travel remain vital to the industry, and as a result, U.S. GDP growth, consumer
confidence, and corporate earnings remain vital to the industry’s success. The expansion in capital spending
has been in response to projected demand. However, overdevelopment in certain areas is a concern. Looking
forward, any prolonged low occupancy rates could threaten hotels that are heavily leveraged. As for metrics,
occupancy, average daily room rate, and revenue per available room should be considered when analyzing
the industry or a player within the industry.
Casinos generate roughly $68 billion in revenues annually, and typically, 50% of a casino hotel’s revenues
come from gaming, 20% from hotel rooms, 15% from food and beverages, and 15% from retail stores, shows,
and other entertainment offerings. Expansion and consolidation have been recent trends of note. In 2005
alone, MGM Resorts International purchased Mandalay Resort Group for close to $8 billion and Harrah’s
bought Caesars for over $9 billion. Recent years have also seen a good amount of new casino construction in
the $700 million range as competitors jockey to attract visitors by providing more elaborate offerings. Looking
ahead, further capacity expansion may threaten margins. Meanwhile, most of the industry’s top-line growth
has come from Native American casinos, which at present generate roughly $16 billion in revenues annually.
V
FA
AB
OR
PEER GROUP: Hotels, Restaurants & Leisure
LE
AB
-50%
R
VO
FA
Revenue Growth (TTM)
LE
UN
CMG
DPZ DNKNSBUX
PNRA ARMK
1%
DRI
CBRL
YUM
MCD
5%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -7.4% and
238.4%. Companies with NA or NM values do not
appear.
Ticker
SBUX
DRI
ARMK
QSR
DPZ
PNRA
DNKN
CBRL
YUM
CMG
MCD
Recent
Company Name
Price ($)
STARBUCKS CORP
58.75
DARDEN RESTAURANTS INC
63.74
ARAMARK
31.53
RESTAURANT BRANDS INTL INC 33.67
DOMINO'S PIZZA INC
132.90
PANERA BREAD CO
205.02
DUNKIN' BRANDS GROUP INC
46.19
CRACKER BARREL OLD CTRY STO 147.90
YUM BRANDS INC
70.96
CHIPOTLE MEXICAN GRILL INC
505.33
MCDONALD'S CORP
118.37
Market
Cap ($M)
86,838
8,174
7,627
7,601
6,626
4,714
4,234
3,541
29,002
15,182
108,691
Price/
Earnings
36.04
22.85
31.85
67.34
42.32
35.29
43.17
20.69
24.30
33.49
24.61
Net Sales
TTM ($M)
19,732.90
6,905.00
14,337.06
4,052.20
2,118.30
2,681.58
810.93
2,869.52
13,105.00
4,501.22
25,413.00
Net Income
TTM ($M)
2,461.60
368.70
243.79
375.10
178.06
149.34
105.23
171.82
1,293.00
475.60
4,529.30
The peer group comparison is based on Major Restaurants companies of comparable size.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NASDAQ: SBUX
STARBUCKS CORP
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.36%
COMPANY DESCRIPTION
Starbucks Corporation operates as a roaster, marketer,
and retailer of specialty coffee worldwide. The company
operates in four segments: Americas; Europe, Middle
East, and Africa; China/Asia Pacific; and Channel
Development. Its stores offer coffee and tea beverages,
packaged roasted whole bean and ground coffees,
single-serve and ready-to-drink coffee and tea products,
juices, and bottled water. The company's stores also
provide fresh food and snack offerings; and various food
products, such as pastries, and breakfast sandwiches
and lunch items, as well as serve ware, beverage-making
equipment, and accessories. In addition, it licenses its
trademarks through licensed stores, and grocery and
national foodservice accounts. The company offers its
products under the Starbucks, Teavana, Tazo, Seattle's
Best Coffee, Evolution Fresh, La Boulange, Ethos,
Starbucks VIA, Seattle's Best Coffee, Frappuccino,
Starbucks Doubleshot, Starbucks Refreshers, and
Starbucks Discoveries Iced Cafe Favorites brand names.
As of September 27, 2015, it operated 23,043 stores.
Starbucks Corporation was founded in 1985 and is based
in Seattle, Washington.
STARBUCKS CORP
2401 Utah Avenue South
Seattle, WA 98134
USA
Phone: 206-447-1575
http://www.starbucks.com
Beta
0.77
Market Capitalization
$86.8 Billion
52-Week Range
$42.05-$64.00
Price as of 2/25/2016
$58.75
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of SBUX shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
5.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, SBUX has a growth score better than 90% of
the stocks we rate.
strong
4.5
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 80% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
5.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 90% of the stocks we monitor.
strong
5.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
strong
3.0
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 50% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NASDAQ: SBUX
STARBUCKS CORP
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.36%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
Beta
0.77
Market Capitalization
$86.8 Billion
52-Week Range
$42.05-$64.00
Price as of 2/25/2016
$58.75
FINANCIAL ANALYSIS
STARBUCKS CORP's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged
when compared to the same period a year ago. Even though sales increased, the net income has decreased.
STARBUCKS CORP has weak liquidity. Currently, the Quick Ratio is 0.71 which shows a lack of ability to cover
short-term cash needs. The company's liquidity has decreased from the same period last year.
At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by
3.56% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in
a position in which financial difficulties could develop in the future.
0.39
1.89 E
2.18 E
Q2 FY16
2016(E)
2017(E)
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q1 FY16
5,373.50
1,229.40
993.90
687.60
Q1 FY15
4,803.30
1,079.80
873.80
983.40
Q1 FY16
2,379.90
12,943.50
2,347.70
5,981.50
Q1 FY15
1,953.10
12,351.10
2,048.40
5,775.40
Q1 FY16
28.56%
22.87%
18.50%
1.52
19.01%
41.15%
Q1 FY15
28.46%
22.48%
18.19%
1.38
20.32%
43.47%
Q1 FY16
1.07
0.28
16.50
60.24
Q1 FY15
1.28
0.26
16.30
53.61
Q1 FY16
1,486
0.20
0.46
4.03
NA
10,770,952
Q1 FY15
1,501
0.16
0.65
3.85
NA
8,281,083
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NASDAQ: SBUX
STARBUCKS CORP
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.36%
RATINGS HISTORY
Our rating for STARBUCKS CORP has not changed
since 2/25/2014. As of 2/25/2016, the stock was
trading at a price of $58.75 which is 8.2% below its
52-week high of $64.00 and 39.7% above its 52-week
low of $42.05.
BUY: $35.28
2 Year Chart
Beta
0.77
Market Capitalization
$86.8 Billion
$70
$60
Price/Earnings
$50
$40
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/25/14
$35.28 No Change
From
Buy
To
Buy
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 2/25/2016)
1
2
3
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
Price/Projected Earnings
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
5
1
2
3
4
5
2
3
premium
4
5
1
2
premium
3
4
5
Price to Earnings/Growth
4
5
discount
1
2
3
premium
4
5
discount
SBUX 9.39
Peers 2.95
• Premium. The PEG ratio is the stock’s P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• SBUX trades at a significant premium to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
SBUX -1.22
Peers 22.69
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, SBUX is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
SBUX 4.42
Peers 2.96
• Premium. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• SBUX is trading at a significant premium to its
industry.
3
SBUX 21.95
Peers 14.94
• Premium. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• SBUX is trading at a significant premium to its
peers.
discount
SBUX 14.59
Peers 12.45
• Premium. A higher price-to-book ratio makes a
stock less attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• SBUX is trading at a premium to its peers.
2
premium
discount
SBUX 26.95
Peers 24.01
• Premium. A higher price-to-projected earnings ratio
than its peers can signify a more expensive stock
or higher future growth expectations.
• SBUX is trading at a significant premium to its
peers.
1
1
Price/CashFlow
discount
premium
Price/Sales
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
4
SBUX 36.04
Peers 29.30
• Premium. A higher P/E ratio than its peers can
signify a more expensive stock or higher growth
expectations.
• SBUX is trading at a premium to its peers.
Price/Book
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Price as of 2/25/2016
$58.75
VALUATION
BUY. This stock's P/E ratio indicates a premium compared to an average of 29.30 for the Hotels, Restaurants
& Leisure industry and a significant premium compared to the S&P 500 average of 21.53. For additional
comparison, its price-to-book ratio of 14.59 indicates a significant premium versus the S&P 500 average of
2.56 and a significant premium versus the industry average of 12.45. The price-to-sales ratio is well above
both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and
other key valuation criteria, STARBUCKS CORP proves to trade at a premium to investment alternatives within
the industry.
premium
2014
52-Week Range
$42.05-$64.00
1
2
3
lower
4
5
higher
SBUX 15.99
Peers 7.04
• Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
• SBUX has a sales growth rate that significantly
exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5