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Starbucks Corporation (SBUX) Buy or Sell Stock Guide 04/08/2018


The analysis below may be helpful to you if you have any of the following questions about SBUX stock: • • • •

Is SBUX a buy or a sell? Should I sell or hold SBUX stock today? Is SBUX a good buy / a good investment? What are SBUX analyst opinions, recommendations, ratings?

Here are SBUX stock buy reasons/signals: 1. We expect Starbucks to adapt to evolving consumer behaviors thanks to a brand that transcends channels; digital, social media, and loyalty program investments (including Mobile Order & Pay); and an unrivaled in-store experience.

2. A revitalized food/beverage menu and upscale store redesigns have elevated the Starbucks customer experience, penetrated new dayparts, and boosted unit-level productivity metrics.

3. Despite ambitious growth plans, we believe Starbucks can sustain a 45%-50% dividend payout ratio over the next decade, implying midteens average annual dividend growth.

4. Starbucks is one of the most recognized coffee brands in the world. From espresso to specialty roast and ground coffee to premium single-serve market, Starbucks commands authority and a leading position in all coffee segments. It is the number one premium packaged coffee brand in America.

5. Starbucks holds a leading position in digital, card, loyalty and mobile capabilities. Retail companies are witnessing a shift in consumer shopping behavior from bricks-and-mortar stores to online shopping. Customers are consuming more food/ beverages away from home and using mobile phones for most online activity.

6. Starbucks is strengthening its product portfolio with significant innovation around beverages, refreshment, health and wellness, tea and core food offerings.

7. Moreover, the Starbucks brand is gaining popularity with consumers across Asia as the company is increasingly investing in the Asian markets. The relatively low per-capita consumption as well as a burgeoning middle class with rising income levels increase the demand for convenience food and beverages and promise significant growth potential.


8. SBUX quarterly revenue growth was 5.90%, higher than the industry and sector average revenue growth (2.95% and 4.91%, respectively).

9. SBUX forward dividend yield is 2.10%, higher than the industry (0.73%) and sector (0.64%) forward dividend yields.


10. SBUX average analyst rating is Buy.

11. SBUX average analyst price target ($64.70) is above its current price ($58.52).

Here are SBUX stock sell reasons/signals: 1. With minimal switching costs, there is little to prevent consumers from trading to other chains such as Dunkin' Brands, Tim Hortons, or McDonald's. Joh. A. Benckiser's consolidation of Panera, Mondelez's coffee assets, D.E Master Blenders, Peet's, Caribou, Einstein Noah, and Keurig could evolve into a more significant rival.


2. Teavana, Princi, and Evolution Fresh may not evolve into successful stand-alone brands or retail concepts and could divert management's attention from the core Starbucks brand.

3. Commodity cost and foreign currency volatility can disrupt quarter-to-quarter results.

4. The company’s Americas segment (accounting for 70% of the total revenues) posted 3% comps growth in fiscal 2017, down considerably from 6% in the year-ago period. In fact, transactions remained unchanged year over year and ticket grew 4%. This compares unfavorably with 5% growth in transaction and an increase of 1% in ticket in the year-ago period.

5. Despite economic growth, somewhat lower energy prices and higher income, consumers increased their spending only modestly on dining out, which resulted in low consumption over the past few quarters. This is because, along with wage growth, inflation is also on the rise, which translates to lower real income and thus less disposable income. The situation has taken a worse turn, thanks to higher health care costs and tightened credit availability in the United States.

6. SBUX profitability is declining. The YoY profit margin change was -0.33pp.


7. SBUX Price/Book ratio is 14.92, and it’s high compared to its industry peers’ P/B ratios.

What are your thoughts on SBUX? If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Starbucks Corporation (SBUX) Buy or Sell Stock Guide  

Finstead Ultimate Stock Guides Review reasons to buy, hold or sell your favorite stocks before trading them!

Starbucks Corporation (SBUX) Buy or Sell Stock Guide  

Finstead Ultimate Stock Guides Review reasons to buy, hold or sell your favorite stocks before trading them!

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