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Category: Stock Market and Starbucks (SBUX)
Date: 29 July 2020 Stock Price of Starbucks: $74.64 We take a look at the 3rd quarter 2020 earnings report of Starbucks, one of the world's best known coffee shop franchises. The group's net revenues declined by -38% for the quarter compared to the same quarter of the previous year due to the Covid-19 pandemic. Starbucks (SBUX) also recorded a net loss of -$0.58 per stock.
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We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers- Kevin Johnson, president and ceo."
About Starbucks (SBUX)
For those that don't know anything about Starbucks below a bit more detail regarding the group as obtained from their website
The Starbucks Story
Our story began in 1971. Back then we were a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market. Today, we are privileged to connect with millions of customers every day with exceptional products and more than 30,000 retail stores in 80 markets.
Folklore
Starbucks is named after the first mate in Herman Melville’s Moby Dick. Our logo is also inspired by the sea – featuring a twin-tailed siren from Greek mythology
.
Starbucks Mission
Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
Our Coffee
We’ve always believed in serving the best coffee possible. It's our goal for all of our coffee to be grown under the highest standards of quality, using ethical sourcing practices. Our coffee buyers personally travel to coffee farms in Latin America, Africa and Asia to select high quality beans. And our master roasters bring out the balance and rich flavor of the beans through the signature Starbucks Roast.
Our Stores
Our stores are a neighborhood gathering place for meeting friends and family. Our customers enjoy quality service, an inviting atmosphere and an exceptional beverage. Total stores: 30,000 across 80 markets (as of June 30, 2019)
Our Partners
We offer some of the finest coffees in the world, grown, prepared and served by the finest people. Our employees, who we call partners, are at the heart of the Starbucks Experience. We believe in treating our partners with respect and dignity. We are proud to offer several landmark programs for our partners, including comprehensive health coverage for eligible full- and part-time partners, access to full college tuition coverage through the Starbucks College Achievement Plan, and equity in the company through Bean Stock.
Our Products
Starbucks offers a range of exceptional products that customers enjoy in our stores, at home, and on the go.
Coffee: More than 30 blends and single-origin premium coffees.
Handcrafted Beverages: Fresh-brewed coffee, hot and iced espresso beverages, Iced Coffee, Cold Brew, Nitro, Frappuccino® coffee and non-coffee blended beverages, Starbucks Refreshers® beverages, and Teavana® teas.
Merchandise: Coffee- and tea-brewing equipment, mugs and accessories, packaged goods, books and gifts.
Fresh Food: Baked pastries, cold and hot sandwiches, salads, salad and grain bowls, oatmeal, yogurt parfaits and fruit cups.
Consumer products available where groceries are sold
The Starbucks Story
Our story began in 1971. Back then we were a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market. Today, we are privileged to connect with millions of customers every day with exceptional products and more than 30,000 retail stores in 80 markets.
Folklore
Starbucks is named after the first mate in Herman Melville’s Moby Dick. Our logo is also inspired by the sea – featuring a twin-tailed siren from Greek mythology
.
Starbucks Mission
Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
Our Coffee
We’ve always believed in serving the best coffee possible. It's our goal for all of our coffee to be grown under the highest standards of quality, using ethical sourcing practices. Our coffee buyers personally travel to coffee farms in Latin America, Africa and Asia to select high quality beans. And our master roasters bring out the balance and rich flavor of the beans through the signature Starbucks Roast.
Our Stores
Our stores are a neighborhood gathering place for meeting friends and family. Our customers enjoy quality service, an inviting atmosphere and an exceptional beverage. Total stores: 30,000 across 80 markets (as of June 30, 2019)
Our Partners
We offer some of the finest coffees in the world, grown, prepared and served by the finest people. Our employees, who we call partners, are at the heart of the Starbucks Experience. We believe in treating our partners with respect and dignity. We are proud to offer several landmark programs for our partners, including comprehensive health coverage for eligible full- and part-time partners, access to full college tuition coverage through the Starbucks College Achievement Plan, and equity in the company through Bean Stock.
Our Products
Starbucks offers a range of exceptional products that customers enjoy in our stores, at home, and on the go.
Coffee: More than 30 blends and single-origin premium coffees.
Handcrafted Beverages: Fresh-brewed coffee, hot and iced espresso beverages, Iced Coffee, Cold Brew, Nitro, Frappuccino® coffee and non-coffee blended beverages, Starbucks Refreshers® beverages, and Teavana® teas.
Merchandise: Coffee- and tea-brewing equipment, mugs and accessories, packaged goods, books and gifts.
Fresh Food: Baked pastries, cold and hot sandwiches, salads, salad and grain bowls, oatmeal, yogurt parfaits and fruit cups.
Consumer products available where groceries are sold
- Coffee and Tea: Whole bean and ground coffee (Starbucks and Seattle’s Best Coffee brands), Starbucks VIA® Instant, Starbucks espresso capsules available on the Nespresso and Nescafé Dolce Gusto systems, Starbucks® Coffee K-Cup® pods, Starbucks® and Teavana® Verismo® pods.
- Ready-to-Drink (RTD): Starbucks® bottled Frappuccino® coffee drinks, Starbucks Iced Latte, Single Serve Cold Brew, Doubleshot® Coffee Smoothies, Teavana Craft Iced Teas, Teavana Sparkling Craft Iced Teas, Starbucks Discoveries® chilled cup coffees, Starbucks Discoveries Iced Café Favorites®, Starbucks Iced Coffee, Starbucks Doubleshot® espresso drinks, Starbucks Doubleshot® Energy Coffee drinks; Starbucks Refreshers® beverages, Evolution Fresh™ bottled juices.
Brand Portfolio
Starbucks Coffee, Seattle’s Best Coffee, Teavana, Evolution Fresh, Ethos Water and Torrefazione Italia Coffee.
Investor Information
Starbucks Coffee, Seattle’s Best Coffee, Teavana, Evolution Fresh, Ethos Water and Torrefazione Italia Coffee.
Investor Information
- Starbucks went public on June 26, 1992 at a price of $17 per share (or $0.53 per share, adjusted for subsequent stock splits) and closed trading that first day at $21.50 per share.
- Starbucks was incorporated under the laws of the State of Washington, in Olympia, Washington, on Nov. 4, 1985.
- Starbucks Corporation's common stock is listed on NASDAQ, under the trading symbol SBUX.
Overview of Starbucks 3rd quarter 2020 earnings report
The numbers below refers to the latest quarter unless specified otherwise:
- Net revenues: $7.097 billion (up from $6.632 for the same quarter of the previous year)
- Net revenues increased by 7% over the last 12 months
- Total operating expenses: $5.951 billion (up from $5.684 billion for the same quarter of the previous year)
- Total operating expenses increased by 4.7% over the last 12 months
- Net earnings: $885.7 million (up from $760.6 million for the same quarter of the previous year)
- Net earnings increased by 16.4% over the last 12 months
- Diluted earnings per share: $0.74 (up 21.3% from $0.61 for the same quarter of the previous year)
- PE ratio of Starbucks: 26.4
- Dividend per share for the quarter: $0.41 (up from $0.36 for the same quarter of the previous year)
- Dividend yield of Starbucks: 2.1%
- Diluted number of shares in issue: 1.191 billion
- Cash and cash equivalents: $3.040 billion
- Cash and cash equivalents per share: $2.54
- Cash and cash equivalents makes up 3.3% of Starbucks' market capital
- Cash and cash equivalents makes up 10.96% of Starbucks' total assets
- Inventories: $1.408 billion
- Inventories makes up 5.1% of Starbucks' total assets
- Cash generated from operations: $1.836 billion
- Cash generated from operations per share: $1.53
Starbucks' management commentary on their 3rd quarter 2020 earnings report
SEATTLE--(BUSINESS WIRE)-- Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal third quarter ended June 28, 2020. GAAP results in fiscal 2020 and fiscal 2019 include items that are excluded from non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information.
“Since the beginning of the COVID-19 outbreak in January, we have taken a principled approach to navigate the crisis, true to our mission and values. Every step of the way, we have thoughtfully addressed the needs of Starbucks stakeholders and are particularly proud of the industry-leading investments we have made to support our partners while creating a safe, familiar and convenient experience for our customers. Starbucks partners have risen to the occasion, and our near-term focus is to recover sales safely and responsibly by offering our customers the comfort and care that differentiate the Starbucks Experience,” said Kevin Johnson, president and ceo.
“We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers. As we continue to drive the recovery, we are also building resilience for the future by accelerating the transformation of our business in ways that will elevate the customer and partner experience and drive long-term growth. We firmly believe that we are well positioned to regain the positive business momentum we had before the pandemic began and look forward to reigniting our 'Growth at Scale' agenda,” concluded Johnson.
“Since the beginning of the COVID-19 outbreak in January, we have taken a principled approach to navigate the crisis, true to our mission and values. Every step of the way, we have thoughtfully addressed the needs of Starbucks stakeholders and are particularly proud of the industry-leading investments we have made to support our partners while creating a safe, familiar and convenient experience for our customers. Starbucks partners have risen to the occasion, and our near-term focus is to recover sales safely and responsibly by offering our customers the comfort and care that differentiate the Starbucks Experience,” said Kevin Johnson, president and ceo.
“We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers. As we continue to drive the recovery, we are also building resilience for the future by accelerating the transformation of our business in ways that will elevate the customer and partner experience and drive long-term growth. We firmly believe that we are well positioned to regain the positive business momentum we had before the pandemic began and look forward to reigniting our 'Growth at Scale' agenda,” concluded Johnson.
Global Store Status
Since the peak of widespread store closures in response to the COVID-19 outbreak across our global markets in April, the vast majority of Starbucks company-operated stores in both the Americas and International segments had reopened by the end of Q3 FY20, most with modified store hours and limited seating. Today, approximately 97% of our global company-operated store portfolio is open, led by 96% in the U.S. and 99% in China, as well as 99% in Japan and 97% in Canada. Currently, approximately 87% of our global licensed store portfolio is open, with remaining temporary closures predominantly in airport, college and university locations within the U.S. and Canadian licensed store portfolios.
Fiscal 2020 Guidance
The company provides the following fiscal 2020 guidance for Q4 and the full year, including updates to certain targets previously discussed in its Form 8-K dated June 10, 2020. The company continues to expect the adverse impacts of the COVID-19 outbreak to moderate meaningfully in Q4 FY20.
Since the peak of widespread store closures in response to the COVID-19 outbreak across our global markets in April, the vast majority of Starbucks company-operated stores in both the Americas and International segments had reopened by the end of Q3 FY20, most with modified store hours and limited seating. Today, approximately 97% of our global company-operated store portfolio is open, led by 96% in the U.S. and 99% in China, as well as 99% in Japan and 97% in Canada. Currently, approximately 87% of our global licensed store portfolio is open, with remaining temporary closures predominantly in airport, college and university locations within the U.S. and Canadian licensed store portfolios.
Fiscal 2020 Guidance
The company provides the following fiscal 2020 guidance for Q4 and the full year, including updates to certain targets previously discussed in its Form 8-K dated June 10, 2020. The company continues to expect the adverse impacts of the COVID-19 outbreak to moderate meaningfully in Q4 FY20.
- Global comparable store sales declines of 12% to 17% for each of Q4 and full year
- Americas and U.S. comparable store sales declines of 12% to 17% for each of Q4 and full year
- (previously declines of 10% to 20% for each of Q4 and full year)
- International comparable store sales declines of 10% to 15% for Q4 and 20% to 25% for full year inclusive of a benefit from value-added tax exemption of approximately 3% and 1%, respectively
- (previously declines of 10% to 20% for Q4 and 20% to 30% for full year)
- China comparable store sales roughly flat to -5% for Q4 and a decline of 15% to 20% for full year, inclusive of a benefit from value-added tax exemption of approximately 4% and 2%, respectively
- (previously roughly flat by the end of Q4 and a decline of 10% to 20% for full year)
- Americas approximately 300 net new stores
- China at least 500 net new stores
- Consolidated revenue decline of 10% to 15% for Q4
- Channel Development revenue decline of 5% to 6% for full year
- Interest expense of approximately $435 million to $445 million
- GAAP and non-GAAP effective tax rates in the range of mid- to high-20%s
- GAAP EPS in the range of $0.06 to $0.21 for Q4 and $0.50 to $0.65 for full year
- (previously $0.11 to $0.36 for Q4 and $0.33 to $0.73 for full year)
- Non-GAAP EPS in the range of $0.18 to $0.33 for Q4 and $0.83 to $0.98 for full year
- (previously $0.15 to $0.40 for Q4 and $0.55 to $0.95 for full year)
- Capital expenditures of approximately $1.5 billion
Starbucks (NASDAQ: SBUX) stock price history
The image below shows the stock price history of Starbucks (SBUX) over the last 5 years. And its been a decent good time for Starbucks (SBUX) stockholders over the last 5 years. 5 years ago the stock of Starbucks was trading at $50.30 and its currently trading at $75.58. That's a return of 50.2% provided to Starbucks stockholders over the last 5 years.
The stock of Starbucks is trading at close to the midpoint of its 52 week high and 52 week low which to us is a clear indication that the short term sentiment and momentum of Starbucks stock is neutral.
The stock of Starbucks is trading at close to the midpoint of its 52 week high and 52 week low which to us is a clear indication that the short term sentiment and momentum of Starbucks stock is neutral.
Starbucks (SBUX) stock vs Dunkin' Brands (DNKN) stock performance over the last 3 years
Lets take a look at the stock price performance of Starbucks and compare it to one of its best known competitors, Dunkin' Brands. The image below shows the stock price performance of Starbucks (SBUX) and Dunkin' Brands (DNKN) over the last 3 years. Both are active in the coffee and quick service food industry and their stock price trends over the last 3 years are very similar. Below the returns provided by these two stocks over the last 3 years:
So in the battle of the coffee shops stock price returns, Starbucks comes out on top.
- Starbucks (SBUX): 40.25%
- Dunkin' Brands (DNKN): 31.42%
So in the battle of the coffee shops stock price returns, Starbucks comes out on top.
Recent coverage of Starbucks (SBUX)
The extract below covers the latest regarding Starbucks as obtained from Investors.com
Coffeehouse chain Starbucks (SBUX) topped fiscal third-quarter forecasts Tuesday and forecast sharp improvement in same-store sales, after warning of steep losses and rearranging store footprint plans. Starbucks stock rose late.
Starbucks Earnings Estimates: Wall Street expects Starbucks to report a loss of 61 cents per share, according to Zacks. Revenue was expected to drop 40% to $4.11 billion. Consensus Metrix forecast a 42.8% drop in same-store sales overall. In the U.S., those sales were seen down 42.5%, with a 21.7% slide in China. Same-store sales in the overall Americas region were forecast to fall 43%.
Results: Per-share loss of 46 cents on revenue of $4.22 billion. Global same-store sales declined 40%, led by a 51% decrease in transactions, partially offset by a 23% increase in average ticket. U.S. comp sales were down 40%, as overall comps in the Americas dropped 41%. China comps were down 19%, with overall international comps down 37%.
The company opened 130 net new stores in Q3, yielding 5% year-over-year unit growth. Starbucks Rewards active members in the U.S. declined 5% to 16.3 million, due to temporary store closures. "We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers," said CEO Kevin Johnson.
Read the full article here
Coffeehouse chain Starbucks (SBUX) topped fiscal third-quarter forecasts Tuesday and forecast sharp improvement in same-store sales, after warning of steep losses and rearranging store footprint plans. Starbucks stock rose late.
Starbucks Earnings Estimates: Wall Street expects Starbucks to report a loss of 61 cents per share, according to Zacks. Revenue was expected to drop 40% to $4.11 billion. Consensus Metrix forecast a 42.8% drop in same-store sales overall. In the U.S., those sales were seen down 42.5%, with a 21.7% slide in China. Same-store sales in the overall Americas region were forecast to fall 43%.
Results: Per-share loss of 46 cents on revenue of $4.22 billion. Global same-store sales declined 40%, led by a 51% decrease in transactions, partially offset by a 23% increase in average ticket. U.S. comp sales were down 40%, as overall comps in the Americas dropped 41%. China comps were down 19%, with overall international comps down 37%.
The company opened 130 net new stores in Q3, yielding 5% year-over-year unit growth. Starbucks Rewards active members in the U.S. declined 5% to 16.3 million, due to temporary store closures. "We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers," said CEO Kevin Johnson.
Read the full article here
Starbucks (SBUX) latest stock valuation
So based on Starbucks (SBUX) latest earnings report and their fiscal guidance what do we value the stock of Starbucks at? Based on their 3rd quarter 2020 earnings report and their guidance provided our valuation model provides a target price (full value price) for Starbucks (SBUX) at $59.90 a stock. We therefore believe the stock of Starbucks is overvalued
We recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $59.90. A good entry point into Starbucks would therefore be at $53.90 or below.
We expect the stock of Starbucks (SBUX) to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months. We therefore rate the stock of Starbucks as a sell.
We recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $59.90. A good entry point into Starbucks would therefore be at $53.90 or below.
We expect the stock of Starbucks (SBUX) to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months. We therefore rate the stock of Starbucks as a sell.
Next earning release of Starbucks (SBUX)
It is expected that Starbucks will release their 4th quarter and full fiscal 2020 earnings report towards the end of October 2020