Stock: SBUX
Rating: Good
Author: Waleed M. Tariq
Summary
- Starbucks stock has a 10-year return slightly above the S&P 500.
- This excellent, low-volatility company’s 25% YTD stock price drop offers investors a great entry point.
- Starbucks offers moderate value growth for those seeking reliable growth equities.
Bullish
- Long-term growth and development initiatives enhance Starbucks stock.
- Company incentives boost customer loyalty. Double-digit MRQ increase for this consumer base.
- Starbucks’ distinctive products and great marketing have attracted a vast customer base.
Bearish
- Due to unionization issues in the U.S., corporation shares are decreasing.
Expansion and Development
- Starbucks’ popularity has led to long-term success. SBUX’s 80% ACSI score shows loyalty programs keep customers loyal.
- North America has half the company’s 34,000 stores and greatest sales. MRQ sales climbed 23% YoY and 120% abroad. 50/50 company-owned/franchised.
- The company’s net revenue reached $8.1 billion by Q1 2022, up 19% YoY due to store growth and a recovering economy.
- With 484 new locations in Q1, the company is on track to reach its 2022 objective.
Valuation
- 23.63 TTM PE and 0.04 PEG. The company’s forward PE of 26.87 and ahead PEG of 2.30 signal price growth. Lower share prices and PE multiples boost investor returns.
ROI
- With a 3-year historical levered FCF margin of 49.46%, the company’s dividend growth should continue.
- The company will purchase back $20 billion in shares over the next three years. MRQ made $4 billion.
Conclusion
- The stock is balanced and benefits risk-averse and conservative portfolios. Current prices make SBUX a great long-term investment.