Plagued by higher wages, unionization efforts, resignations. Solid growth, upward guidance, more stores, innovation. Trades at 26x 2023 earnings, and he models growth at 17%, so it's not crazy. Markets will be rocky, so use the charts and try to buy at the 200-day MA.
Tends to outperform in the early part of the economic cycle. A bit early to build a position. 28x forward earnings for a 10% growth rate, so bit of a valuation premium. Recovered to the 200-day MA, and this could be resistance, so be careful. Commodity and wage increases, and labour shortages, are challenges. Yield is 2.2%.
Believes company has lots of potential.
Supply chain issues seem to be passing.
Return of Howard Shulz to lead the company very positive.
Expecting healthy returns going forward.
~16,000 stores in the USA very strong asset.
Lots of room for store growth in China.
Expecting a $110-$120 share price going forward.
The valuation has been a 50% premium to the market for the past several years. He worries about management with CEO in and out of this job several times; they can't find a successor. Also, he worries about their shutdown in China. In recent years, they have gathered $14 billion in debt and have negative net worth in order to buyback shares. True, Coke and McDonald's also have net worth, but they have predictable cash flows. SBUX's debt is unsustainble.
Struggling to evaluate company at this time (poor service and decreasing shop count).
Underlying negative trends for the company.
Current price not highly attractive. Expecting stock price to decrease.
Expecting inflation to negatively affect business.
Stockchase Research Editor: Michael O'Reilly Recently reported earnings showed promising growth in comparable sales growth worldwide, including China, and supported a ROE of 56%. The company pays a good dividend, backed by a payout ratio under 55% of cash flow. They have been prudently using some cash reserves to aggressively buy back shares and retire debt. We recommend setting a stop loss at $65, looking to achieve $105 -- upside potential over 33%. Yield 2.6% (Analysts’ price target is $105.06)
He used to think it was a fine company under their former CEO until he heard yesterday's management call where the interim CEO rebuked his predecessor. That was unfair. SBUX was a winner during Covid while other retailers lost their way. But their buyback now is too aggressive and they should allow tipping on their app like Uber does. Same-store sales growth in North America rose 12% YOY. Ex-CEO delivered a good final quarter that saw shares soar today.
On her watch list. Back on its growth path. Wage pressures, unionization. NA market is saturated, so needs to look outside NA for growth. China growth has been uneven with Covid lockdowns. Wait and see what the CEO has planned.
He's excited about Schultz returning as (interim) CEO and kicks himself for not buying earlier. The driver is China eventually reopening, a country where Starbucks has a big stake. SBUX can grow there and in the US too as the US opens too. Yes, there are supply and rising wage issues, but Starbucks can grow. The PE has slid from a 33x PE to 20x. He has calls on it and may trim or sell them, but if this pulls back to $80 he will definitely own this. He believes in this company and their command in this industry.
He sold it six weeks ago at $98 and is $88 today. It faces rising costs in the US while China is a challenged place. SBUX is no longer a growth stock, but mature. Schultz grew the company, but he's not sure he can lead it through the next phase of growth.
Not interested. Share buyers today are buying Howard Schultz (returning as interim CEO, announced today). Starbucks faces rising costs, unionization and overall the economic climate in China is not favourable. It can return to the lower-$80s and maybe today's news leads to stability. But it will take a while for shares to climb high enough for him to buy.
As long term investor believes company is a high quality/predictable business.
Would expect ~23x earnings is fair price to pay.
Not a favorite industry as retail requires more capital to grow.
Shares slipped after it reported last night, falling short of estimates which reflects weakness in its Chinese locations, hit by Omicron in the last quarter. At the same, US locations saw unprecedented cost increases. However, numbers are up nicely in US stors where Omicron has blown through. Costs have risen, but the company has raised prices in its store twice, with a third coming, but they haven't dented sales. SBUX shares bounced back in today's session after losses in the after-market the night before.
They report Tuesday. Hopes the CEO addresses the unionizing effort and the impact of Omicron on store hours and shifts. Has the Chinese pre-Olympic lockdown impacting SBUX? That's why shares are down 17% YTD.
Starbucks is a American stock, trading under the symbol SBUX (previously SBUX-Q on Stockchase) on the NASDAQ (SBUX). It is usually referred to as NASDAQ:SBUX or SBUX