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If you like coffee, let's take a look at Starbucks' quarterly results

Monday Dayton
3. 5. 2023
3 min read

I don't need to introduce this company $SBUX-0.8% and there have been nice posts made on it in the past. So let's get straight to the results, which turned out very well. Unfortunately, even still, the stock plunged in non-trading hours.

SBUX

Starbucks

SBUX
$92.46 -$0.70 -0.75%
1 Day
+0.01%
5 Days
+2.88%
1 Month
+4.14%
6 Months
+0.63%
YTD
+2.25%
1 Year
-7.47%
5 Years
+34.81%
Max.
+28,411.04%

The company's results came in above expectations and a lot of the credit goes to China. There, profits were up 3% and overall that helped in international sales growth of 7%, more than double analysts' estimates. Of course, this is very much influenced by the easing of the Covid-19 restrictions.

Capital Structure

Market Cap
104.69B
Enterpr. Val.
126.15B
Revenue
36.69B
Shares Out.
1.13B
Debt/Capital
1.54
FCF Yield
4.19%

Valuation / Dividends

P/E
24.72
EPS
3.74
P/S
2.85
P/B
-12.24
Div. Yield
2.38%
Div. Payout
57.56%

Capital Eff. / Margins

ROIC
18.35%
ROE
-51.32%
ROA
14.71%
Gross
27.81%
Operating
16.64%
Net Profit
11.70%
0
1
2
3
4
5
6
7
8
9

The coffee giant reported second-quarter net income of $908.3 million, or 79 cents a share, compared with $674.5 million, or 58 cents a share, a year earlier. Excluding items, Starbucks earned 74 cents a share. Net sales rose 14.2% to $8.72 billion. The company's revenue rose 11% in the quarter, beating StreetAccount estimates of 7.1%. The US and international markets therefore exceeded expectations. Back domestically, the U.S. increased sales there by 12% on a 6% increase in traffic. The company said its customers tend to be younger, wealthier and so not disappointed by inflation, so it has adapted more drinks for this sector too.

The chain has also been steadily adding to its customer rewards program, which now has 30.8 million active members in the U.S. That's up 15% from last year. They also said they are increasing their store count, from 100 stores in the U.S. and about 360 internationally.

But not to be all rosy, so why did the stock fall less than 6%. As I mentioned above, this growth was helped a lot by the loosening in China. If nothing happens and things keep going this way, that growth won't be as much in future quarters. They're worried that average revenue growth will cool in the second half, CFO Rachel Ruggeri said during the earnings call. "We've already seen it start to moderate," she said, noting uncertainty about consumer behavior and international travel. "So taking all of that into account as we look at our guidance for the full year, we believe that the reaffirmation of our guidance allows us to continue to express momentum, but also for the confidence that we have while we're still navigating a fairly uncertain environment globally."

My personal view: I don't personally hold stocks in my portfolio. I'll wait for a slight downturn if it comes. I think the company is definitely strong in its industry and coffee is almost a drug for many, so like other consumer chains I see it as strong in the market. Of course, events like Covid-19 will weaken it quite a bit. And also what about the international market, there will definitely be more that can affect it negatively. Not everyone will have a coffee from a "fast" chain and prefer to sit in a quaint place with coffee made in other ways.

WARNING: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.


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