Starbucks – SBUX

Fundamental analysis
The American global chain Starbucks was founded in Seattle, WA in 1971 and today is the largest coffee shop chain in the world. In the 1980s, the company was sold by its founders to Mr. Howard Schulz, who also became its CEO and led the company from 1986 to 2000. He then returned to lead the company during the financial crisis of 2007-2008 and left in 2017. His the last return was in March 2022 (after the Covid crisis) and he left this position in March 2023. He remains on the board of the company. Each time he returned to the company’s leadership, Starbucks did better and the stock price rose.
The company has 36,634 stores worldwide. Own 51%, 49% are licensed stores. The main focus is on the American and Chinese markets. In the US, the company has 17,482 stores (47% of all branches) and in China 6,243 branches (17% of all branches). Altogether, 64% of all branches.
The results
The company is benefiting from the post-Covid era, when consumers are returning to restaurants. In Q2 2023, the company managed to raise turnover by 11% (6% increase in transactions and 4% increase in the average order price). We see the main increase in two large markets, the USA (+ 12% turnover) and China (+ 7% turnover). The Chinese market in particular has not yet fully opened up and there is a possibility of further growth.
The company’s PE (31.7) is close to the industry average (34.9).
The company pays a stable dividend, last year it was about 2.3% of the share value.
Technical analysis
The stock is in an upward trend according to moving averages since October last year. The lowest price was in May 2022 ($70), since then the stock has been rising. However, the moving averages are approaching the next possible crossing and their slope is quite small, the short-term moving average is horizontal. This indicates ambiguity in the short-term trend.
The RSI is in the neutral zone after returning from an overbought section.
The stock is rebounding from near-term support at $97.
The beta is 0.95, i.e. de facto fully correlated with the S&P500.
Conclusion
Starbucks shares are slowly rising as countries and markets open up in the post-Covid era. The company has a strong focus on the American and Chinese markets, which are now opening up again. They have managed the cafe business well and have a strong brand to match. Current growth of 11% isn’t bad, but it’s also not extremely exceptional. What currently sets the company apart from the average in its industry is the presence of a long-term CEO. Howard Schulz built Starbucks into the brand we know today. He is not only CEO (now former again) but also a shareholder. His long-term approach (more than 25 years) to the company from the perspective of a shareholder and director is something that other companies do not have. This is also confirmed by the regular payment of dividends. In the short term, technical analysis signals are conflicting.
Resources:
https://finance.yahoo.com/quote/SBUX?p=SBUX&.tsrc=fin-srch
https://seekingalpha.com/symbol/SBUX
https://investor.starbucks.com/press-releases/financial-releases/press-release-details/2023/Starbucks-Reports-Q2-Fiscal-2023-Results/default.aspx
https://simplywall.st/stocks/us/consumer-services/nasdaq-sbux/starbucks/valuation
https://en.wikipedia.org/wiki/Starbucks