SBUX Investment Analysis Report & Stock Research, Starbucks Corp.

Starbucks Corporation (SBUX)

SBUX Stock Report

2-Year Price History

View Larger SBUX Chart
NASDAQ:SBUX
$25.12
(3/18 1:20PM)
-1.7%
Open$25.45 Mkt Cap$19.0 Billion
High$25.56 52Wk High$25.66
Low$25.03 52Wk Low$10.81
Volume4.5 Million Avg Vol 10D8.3 Million

Ockham's Rating/Recommendation Summary

Rating specific information requires Premium Access.
Buy Now or Learn More about Ockham's Features and Services.

SBUX Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at SBUX through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 3.34x and 1.93x respectively.

Utilizing this range we can see that SBUX’s current Price to Sales per share ratio of 1.69x is significantly below its average levels historically. In fact, with a current price of $24.28, SBUX is a full 36% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for SBUX.

SBUX Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of SBUX, Ockham views their current Cash Earnings as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for SBUX, the current level of Cash Earnings compared to its historical levels helps identify where SBUX is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 28.04 and a historical low Cash Earnings per share ratio of 15.89, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for SBUX? From the Ockham perspective, we are looking specifically at SBUX to see if the market is recognizing the huge disparity between SBUX's past stock price to Cash Earnings ratio to today's levels. At a difference of 28% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at SBUX. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

SBUX Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company. SBUX may pay a dividend at this time; however, there is an insufficient amount of history to incorporate it into our analysis. Therefore, we are not utilizing the dividends or lack thereof in our study. As SBUX more consistent dividend history is made available, we will begin to factor this into the Ockham approach.

Peer Comparison

:

Starbucks Corp. Industry Grouping

(3/17/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including SBUX) 38.62 3.69 » 716.26 3.05 0.50 » 578.25 129.65% 24.68%
*10 year range does not include current year values
Carnival Corp. CCL $23.3 Billion $37.60 12.75 3.29 » 21.57 3.01 0.80 » 5.91 6.23% 11.64%
Starbucks Corp. SBUX $19.0 Billion $25.56 15.97 5.48 » 29.68 1.69 0.54 » 3.87 13.05% 20.94%
Yum! Brands, Inc. YUM $18.1 Billion $38.64 10.64 5.42 » 13.97 1.87 0.66 » 1.95 0.88% 57.05%
Las Vegas Sands Corp. LVS $13.1 Billion $19.84 130.60 2.56 » 194.13 2.84 0.20 » 17.90 30.69% 8.80%
Priceline.com Inc. PCLN $11.1 Billion $242.92 19.83 3.27 » 3105.00 4.66 0.24 » 4.51 20.66% 32.84%
Wynn Resorts Limited WYNN $9.0 Billion $72.81 19.26 3.91 » 246.61 2.89 0.59 » 2861.00 589.81% 13.07%
Ockham Coverflow

Sharpen Your Investing

  • Access to over 5,000 stock reports
  • Portfolio Analytics and Tracking
  • Business Television Tracking
  • CNBC and Fox Business Show Recaps
Get Started
The Latest Financial News
The most recent Stocks on Financial TV & Blogs from impactful financial news sources
5:40P, Mar. 16,2010 SBUX $25.28 Starbucks Corp.
Fast Money

Look Out for Starbucks Corporation: Its Very Active in the News

Something important is going on with SBUX today, as it is getting a lot of attention on business television and influential blogs.

We have recently (Saturday, March 13, 2010) downgraded this stock due to deteriorating fundamentals. The Ockham valuation currently has a Fairly Valued stance on SBUX because it trades within the price range that we would expect given current market conditions and fundamentals. Interestingly, overall sentiment looks bearish according to the Motley Fool's CAPS survey, as most of their users see Starbucks Corporation underperforming. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Starbucks Corporation has actually sunk a bit in comparison to the others.

“… next call of the day, ubs upgrading STARBUCKS to a buy saying it's improving sales and giving the stock a 4% jolt. We have made fun of pete again and again. Mcsmoothie. …”

5:22P, Mar. 16,2010 SBUX $25.29 Starbucks Corp.
Fast Money

SBUX Having an Active Day in News, Now on Fast Money

Something important is going on with SBUX today, as it is getting a lot of attention on business television and influential blogs.

Due to deterioration in our valuation, we downgraded SBUX as of Saturday, March 13, 2010. We noticed recently that in comparison to all other stocks we analyze in the news; SBUX has received less coverage from the financial media in business television and blogs. While bearish sentiment on a stock is not always a bad thing, it is something you need to be aware of. The Motley Fool survey of crowd sentiment shows that many investors believe this stock will underperform. Starbucks Corporation receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals.

“… Shares of STARBUCKS getting an extra boost today. We'll break down the biggest calls of the day. All that when america's. …”

1:11P, Mar. 16,2010 SBUX $25.21 Starbucks Corp.
Power Lunch

Discussion of Debt at SBUX on Power Lunch

At Ockham, we look to make sure that any debt taken on by a company corresponds directly to increases is sales. Take a look at RazorWire for the latest on SBUX's debt from Power Lunch.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Power Lunch said about STARBUCKS CORP.

Learn About RazorWire?
1:00P, Mar. 16,2010 SBUX $25.21 Starbucks Corp.
WSJ Marketbeat

Sales Growth at Starbucks Corporation Discussed on WSJ Marketbeat

RazorWire keeps tabs on the important news investors should be aware of; today, SBUX growth was the focus on WSJ Marketbeat.

We have recently (Saturday, March 13, 2010) downgraded this stock due to deteriorating fundamentals. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Starbucks Corporation has actually sunk a bit in comparison to the others. Interestingly, overall sentiment looks bearish according to the Motley Fool's CAPS survey, as most of their users see Starbucks Corporation underperforming. The Ockham valuation currently has a Fairly Valued stance on SBUX because it trades within the price range that we would expect given current market conditions and fundamentals.

“… STARBUCKS jumped more than 3% Tuesday, after UBS analysts raised its rating on the latte giant to buy, citing in part, STARBUCKS’ instant coffee product, Via. …”

1:00P, Mar. 16,2010 SBUX $25.21 Starbucks Corp.
WSJ Marketbeat

SBUX's Sales and Growth in Focus on WSJ Marketbeat

Growing sales is a great sign for investors, whereas falling sales is a significant sign of trouble.

Due to deterioration in our valuation, we downgraded SBUX as of Saturday, March 13, 2010. While bearish sentiment on a stock is not always a bad thing, it is something you need to be aware of. The Motley Fool survey of crowd sentiment shows that many investors believe this stock will underperform. Starbucks Corporation receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; SBUX has received less coverage from the financial media in business television and blogs.

“… STARBUCKS jumped more than 3% Tuesday, after UBS analysts raised its rating on the latte giant to buy, citing in part, STARBUCKS’ instant coffee product, Via. …”

10:03A, Mar. 16,2010 SBUX $25.14 Starbucks Corp.
Fox Business

Starbucks Corporation Dividend News from Fox Business

For income investors, dividend news is obviously important. SBUX's dividends were discussed recently on Fox Business.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Fox Business said about STARBUCKS CORP.

Learn About RazorWire?
10:03A, Mar. 16,2010 SBUX $25.14 Starbucks Corp.
InBusiness With Margaret Brennan

SBUX's Dividends Mentioned by InBusiness With Margaret Brennan

If SBUX's dividends are important to you, take a look at the news as they were the topic of conversation on InBusiness With Margaret Brennan.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what InBusiness With Margaret Brennan said about STARBUCKS CORP.

Learn About RazorWire?
10:02A, Mar. 16,2010 SBUX $25.17 Starbucks Corp.
Squawk On The Street

Squawk On The Street: Will SBUX Test Its 52-week High?

When a stock reaches a notable high point, investors have to ask themselves: take profits or let it run? See what Squawk On The Street recommends for Starbucks Corporation and obviously Ockham has an opinion as well.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, SBUX has been less covered in the news compared to the rest of our universe of stocks. Our valuation of SBUX has become less favorable recently, and we have seen it necessary to downgrade the stock. The crowd at The Motley Fool does not like SBUX and believes that it will Underperform. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on SBUX.

“… STARBUCKS climbing more than 3% on the nasdaq, buy from neutral from ubs, also a 52-week high. Other stocks hitting that milestone include walmart, limited, xerox. Erin? > > …”

9:46A, Mar. 16,2010 SBUX $25.09 Starbucks Corp.
Squawk On The Street

Analysts' Take on Starbucks Corporation Mentioned on Squawk On The Street

Wall Street analysts can have a huge affect on stocks, and today Squawk On The Street talked about an analysts' opinion in relation to SBUX.

Starbucks Corporation receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; SBUX has received less coverage from the financial media in business television and blogs. Due to deterioration in our valuation, we downgraded SBUX as of Saturday, March 13, 2010. While bearish sentiment on a stock is not always a bad thing, it is something you need to be aware of. The Motley Fool survey of crowd sentiment shows that many investors believe this stock will underperform.

“… Also look at STARBUCKS soaring 2. 5%, upgraded to buy from neutral at ubs, headed to 29, they say, the price target up $2 higher. …”

9:34A, Mar. 16,2010 SBUX $24.99 Starbucks Corp.
In the Loop

Check Out In the Loop and News on SBUX

The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Starbucks Corporation.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what In the Loop said about STARBUCKS CORP.

Learn About RazorWire?
View All Starbucks Corp. Stock News

Key Fundamentals

SBUX - Starbucks Corporation Fundamentals
Price (3/18 1:20PM) $25.12
Volume (3/18 1:20PM) 4.5 Million
Last Close Price $25.56
10 Day Average Volume 8.3 Million
13 Week Price Range $21.26 - $25.66
52 Week Price Range $10.81 - $25.66
LTM Revenue $10.7 Billion
 
Shares Outstanding (09/2009) 743.4 Million
Market Capitalization $19.0 Billion
Shares Held By Institutions 535.0 Million
Institutional Holders 711
% Shares Held By Institutions 72.60%
Earnings Per Share (EPS) $0.52
P/E Ratio 34.10
Book Value Per Share $4.51
 
Gross Margin 52.60%
Annual Dividend 0.00
Dividend Yield 0.00%
Beta 1.36
Fiscal Year Ends September

About Starbucks Corp.

Starbucks Corporation is considered to operate in the Services sector. They specifically operate in the Specialty Eateries business segment contained within the Leisure industry.

The Company purchases and roasts whole bean coffees and sells them, along with fresh, brewed coffees, Italian-style espresso beverages, cold blended beverages, a selection of teas and coffee-related accessories and equipment through its retail stores.