Starbucks Corporation Fundamental Analysis (NASDAQ: SBUX)
Starbucks Corporation (NASDAQ: SBUX) shows weak financial fundamentals with a PE ratio of 49.57, profit margin of 6.67%, and ROE of -31.39%. The company generates $37.8B in annual revenue with weak year-over-year growth of 2.79%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 34.3/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze SBUX's fundamental strength across five key dimensions:
Efficiency Score
WeakSBUX struggles to generate sufficient returns from assets.
Valuation Score
ModerateSBUX shows balanced valuation metrics.
Growth Score
WeakSBUX faces weak or negative growth trends.
Financial Health Score
ModerateSBUX shows balanced financial health with some risks.
Profitability Score
WeakSBUX struggles to sustain strong margins.
Key Financial Metrics
Is SBUX Expensive or Cheap?
P/E Ratio
SBUX trades at 49.57 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, SBUX's PEG of 1.43 indicates fair valuation.
Price to Book
The market values Starbucks Corporation at -16.35 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 17.84 times EBITDA. This signals the market has high growth expectations.
How Well Does SBUX Make Money?
Net Profit Margin
For every $100 in sales, Starbucks Corporation keeps $6.67 as profit after all expenses.
Operating Margin
Core operations generate 9.65 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-31.39 in profit for every $100 of shareholder equity.
ROA
Starbucks Corporation generates $8.90 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Starbucks Corporation produces operating cash flow of $4.97B, showing steady but balanced cash generation.
Free Cash Flow
Starbucks Corporation produces free cash flow of $3.71B, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $3.25 in free cash annually.
FCF Yield
SBUX converts 2.97% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
49.57
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.43
vs 25 benchmark
P/B Ratio
Price to book value ratio
-16.35
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.29
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-2.92
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.76
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.31
vs 25 benchmark
ROA
Return on assets percentage
0.09
vs 25 benchmark
ROCE
Return on capital employed
0.20
vs 25 benchmark
How SBUX Stacks Against Its Sector Peers
| Metric | SBUX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 49.57 | 24.94 | Worse (Expensive) |
| ROE | -31.39% | 965.00% | Weak |
| Net Margin | 6.67% | -2081.00% (disorted) | Weak |
| Debt/Equity | -2.92 | 0.71 | Strong (Low Leverage) |
| Current Ratio | 0.76 | 2.36 | Weak Liquidity |
| ROA | 8.90% | 364.00% | Weak |
SBUX outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Starbucks Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
62.69%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
105.77%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
205.73%
Industry Style: Cyclical, Growth, Discretionary
High Growth