Skip to Content

Starbucks Corp SBUX

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Steady Does It; Starbucks' Long-Term China Strategy Intact, Investors Should Look Through the Noise

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Investors have quickly taken note of a bleak intra-quarter report from wide-moat Yum China Sept. 14, sending wide-moat Starbucks' shares down 4% as they contemplate the coffee chain's exposure to the region. Yum China's management indicated that the sustained spread of the delta variant has resulted in piecemeal closures across 16 (of 23) Chinese provinces, with the firm anticipating a 50%-60% decline in quarterly operating profit, attributable to deleverage and rising input costs. We urge investors not to read too deeply into these headlines, with a number of differences between the firms, hedged commodity prices through at least mid-2022 for Starbucks, and geographic diversification blunting the impact of near-term pressures. We maintain our fair value estimate of $109 per share, with the stock trading in a range we consider fairly valued.

Read Full Analysis

Company Profile

Business Description

Starbucks is one of the most widely recognized restaurant brands in the world, operating 33,300 stores across 83 countries as of June 2021. The firm operates in three segments: the Americas, international markets, and through retail channels via channel development. Starbucks primarily generates revenue from company-operated stores, with additional sales coming from royalties, sales of equipment and products to license partners, ready-to-drink beverages, fresh coffee, and single-serve coffee products.

Contact
2401 Utah Avenue South
Seattle, WA, 98134
T +1 206 447-1575
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 27, 2021
Stock Type Cyclical
Employees 349,000

Related

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.