70.68 -0.00 (-0.00%)
After hours: 4:00PM EST
|Bid||70.66 x 1400|
|Ask||70.71 x 800|
|Day's Range||69.51 - 70.76|
|52 Week Range||56.77 - 77.13|
|Beta (3Y Monthly)||0.94|
|PE Ratio (TTM)||15.74|
|Earnings Date||Feb 4, 2019 - Feb 8, 2019|
|Forward Dividend & Yield||1.39 (2.06%)|
|1y Target Est||73.33|
Should the Trump administration have its way, the plan’s implementation likely will prove challenging — and costly — for SNAP administrators throughout the country.
As the market has rallied the past few weeks, so have shares of retail coffee giant Starbucks (NASDAQ:SBUX). During this stretch, Starbucks stock is up 7%. Things didn't look as good at the beginning of 2019. To kick off the year, one of the world's largest companies, Apple (NASDAQ:AAPL), fired a warning shot about rapidly slowing growth in China -- the world's hottest economy. Stocks broadly fell after that warning shot. But, it's been nothing but up, up, and away for markets since then. Following the Apple-led market selloff in early January, the S&P 500 has rallied an impressive 8% in under three weeks. But while Starbucks is up nearly that much, SBUX investors shouldn't be forgetting the Apple warning shot so soon. To be frank, Starbucks stock should not have been part of the broad market rally in January. The reality is that Starbucks, much like Apple, is a company on a slowing growth trend with worrisome exposure to the slowing China economy. As such, first quarter numbers -- due after the bell on Thursday, January 24 -- won't be very good, and they will likely include an Apple-like warning about slowing China growth going forward. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Artificial Intelligence Stocks to Consider That negative update isn't priced into Starbucks stock. Thus, not only could Starbucks fall after Q1 earnings, but it could also fall by quite a bit. All together, while Starbucks is a long-term growth company that will ultimately head higher in a multi-year window, caution is warranted on Starbucks stock ahead of Q1 earnings. ### The Numbers May Disappoint Last quarter, Starbucks reported headline revenue and earnings beats with above-consensus comparable sales growth and a healthy guide. The theme of the conference call was that expansion in the China market would offset slowing growth in U.S. market, and reinvigorate the overall growth narrative. Investors rallied around that idea. Starbucks stock has done nothing but grind higher since then. That puts Starbucks stock in a precarious position heading into Q1 earnings. If anything has become clear since the last earnings report, it is that the Chinese economy is dramatically cooling off. Apple cut its quarterly guide in a big way due to slowing growth in China. China reported 6.6% GDP growth in 2018, the lowest annual pace in nearly 30 years. Q4 GDP growth was 6.4%, the slowest quarterly pace since the Financial Crisis. Other economic data coming out of China has been weak, including retail-sales growth rates hovering at 15 year lows. This is all bad news for Starbucks stock. The core of the near term bull thesis on SBUX is that China growth is going to pave a brighter future for this company, which has struggled with slowing growth over the past several years. But, that probably isn't happening yet. It's highly unlikely that Starbucks is bucking the broader China economic trend and putting up strong numbers in China. As such, China numbers this quarter will likely disappoint. If they do, the numbers globally will disappoint, too. Also, the tone on the conference call may be Apple-like, and include warnings about slowing growth going forward. Overall, Starbucks is heading into an earnings report which has the potential to be pretty bad. That isn't a favorable setup for Starbucks stock, especially at current valuation levels. ### The Valuation Doesn't Incorporate Disappointment At the end of the day, it always comes down to numbers and valuation. For example, despite significant sales pressure in China, Apple stock is a buy here because it's trading at just 12x forward earnings, and is priced for all the bad news. That isn't true for Starbucks stock. Despite facing significant sales pressure in China like Apple, Starbucks stock doesn't trade at 12x forward earnings. Instead, it still trades at 25x forward earnings. That is simply too big of a multiple for Starbucks stock. The whole restaurant industry trades at 22x forward earnings. Other major players in the quick service restaurant space like McDonald's (NYSE:MCD), Dunkin' (NYSE:DNKN), Yum(NYSE:YUM), Jack In The Box (NASDAQ:JACK) and El Pollo Loco (NASDAQ:LOCO) all trade around 18 to 23x forward earnings. In the past, Starbucks stock warranted a premium valuation because of higher quality growth. That is no longer the case today. Comparable sales growth last quarter was just 3%. That is largely an industry average comparable sales growth rate (McDonald's was up above 4% last quarter, and Yum was at 2%). Thus, this is no longer a higher quality growth company, meaning the stock no longer deserves its premium valuation. Compression to the norm valuation across the QSR space implies ~10% valuation downside risk. ### Bottom Line on SBUX Stock In the long term, Starbucks stock is a winner, powered by global brand leadership in the steady growth coffee retail industry. But, in the near term, Starbucks stock seems due for a correction as it rallies into an earnings report that will likely disappoint due to slowing China growth. * 7 Dark Horse Stocks You Really Need to Look at for 2019 As such, near term caution is warranted. But, post-earnings pullbacks towards the $60 level could quickly turn into buying opportunities. As of this writing, Luke Lango was long AAPL and MCD. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 High-Growth Stocks for the Return of the Bull * The 10 Best Index Funds to Buy and Hold * 10 Lithium Stocks to Buy Despite the Market's Irrationality Compare Brokers The post Caution Is Warranted for Starbucks Stock Ahead of Earnings appeared first on InvestorPlace.
Frankly, it's a bit surprising that Starbucks (NASDAQ:SBUX) stock has held up so well. I was bearish on the company throughout 2018, and I'd argue fundamentals have continued to support my outlook. However, let's give credit where credit is due. Starbucks stock is still near 52-week highs despite a rocky market and various pieces of company-specific bad news. That bad news should begin to weigh on SBUX in 2019 though. Among the worrisome signs, analysts are waking up to the increasing risk of Starbuck's aggressive China strategy. Goldman Sachs recently dropped its buy rating for SBUX, suggesting that China is weak and could lead to a profit warning out of that region. A new competitor in China is gearing up for a major fight with Starbucks. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Dark Horse Stocks You Really Need to Look at for 2019 On top of that, the domestic market continues to be sluggish as competitors like Dunkin Donuts (NASDAQ:DNKN) keep pressuring Starbucks on the home front. Put it all together, and barring a major stock market rally in 2019, I don't see Starbucks stock advancing much beyond the $65 level. ### Luckin Coffee and Starbucks Stock In my previous articles about Starbucks, I've warned that the company is betting too heavily on China. In December, I noted that: "In the most recent earnings report, same store sales from China grew by just 1%. They grew at a significantly better rate in both the United States and the rest of the world excluding Asia. Starbucks is making a worrisome bet on a region that doesn't like their main product and is showing anemic sales growth already." Well, nothing has changed on that front. Starbucks is still pushing full steam ahead. Unfortunately, they're not the only company making a big play for the Chinese coffee market. Luckin Coffee launched in October 2017, but already is becoming a major competitor. Within a year, Luckin Coffee opened 1,500 stores and plans to open around 2,000 over the next year. Luckin has several major differences from Starbucks, based on this analysis from leading China expert Jeffrey Towson. For one, Luckin concentrates much less on the highest-traffic/price real estate. Instead, it locates a block or two from major pedestrian areas. This allows it much cheaper overhead. That functions well, since Luckin is concentrated on take-out orders; many of its locations don't even have seating. Luckin is going for a lower-price strategy, offering prices 20-30% below Starbucks. That still puts Luckin in the same affordable luxury category as Starbucks, but at a more accessible price point. Starbucks, for what it is worth, charges roughly the same prices in China as in New York City despite far lower incomes in China. Additionally, Luckin has an advanced digital strategy. In fact, they don't even take cash; all orders must be done through their smartphone app. It remains to be seen how badly Luckin will hurt Starbucks, but with prominent backers, Luckin is a serious threat. It's rumored that Luckin will be launching its IPO soon, as well. ### Starbucks: Making Moves of Its Own Bulls can counter the Luckin threat by suggesting that Starbucks has a cohesive strategy of its own. Starbucks' digital initiative appears to be paying off in the U.S. And in both the U.S., with Ubereats, and in China with Alibaba (NASDAQ:BABA), Starbucks has established strong delivery options of its own. This will keep Starbucks in the game when Luckin partners with the likes of JD.com (NASDAQ:JD), which has its own great logistics network, to fight for the delivery market. It's important to note that Starbucks isn't just betting on China internationally. The company is coming up on 15,000 stores total outside of the U.S. Starbucks has around 4,000 stores in China now, meaning that almost 11,000 or so are not in China. Many of these are in markets such as Latin America where incomes tend to be higher than in China on average, and there is also less local competition. Starbucks made another big play last summer. It offered exclusive distribution rights for packaged Starbucks coffee to Swiss giant Nestle (OTCMKTS:NSRGY) for more than $7 billion. While Starbucks gives up some upside from its consumer products, it gets plenty of other perks. For one, Nestle is a global leader in distributing consumer products and will undoubtedly get more shelf space for Starbucks in far-flung markets. Starbucks still gets a solid revenue share of the products. And as management described it, this is a "brand amplifier" for Starbucks as it gets their products in front of a wider consumer base who may then visit the company's cafes. ### Starbucks Stock Verdict It's not all bad news for Starbucks. The deal with Nestle in particular looks smart, and management is using the proceeds to buy back stock which will support the share price. The partnership with Alibaba could be enough to hold back competition in China as well; time will tell. The majority of signs still favor the bearish perspective on Starbucks stock, however. At more than 21x forward earnings, investors are paying a high price for SBUX. If it were still growing same-store sales quickly, that'd be one thing. But same-store sales both in the U.S. and China are quite weak. Starbucks has already raised prices repeatedly over the year, how much room do they have left to push that lever? On the expenditure side, rising labor costs will hit margins in the domestic market. Throw in strong competition in various key markets, and Starbucks has some challenges ahead. If a recession should happen to hit, it's not hard to see Starbucks stock dropping back to $50 as consumers have to curtail their spending. At this price, SBUX stock comes with more risk than reward. At the time of this writing, Ian Bezek owned JD stock. You can reach him on Twitter at @irbezek. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 High-Growth Stocks for the Return of the Bull * The 10 Best Index Funds to Buy and Hold * 10 Lithium Stocks to Buy Despite the Market's Irrationality Compare Brokers The post Here's How a Poor China Strategy Could Sink Starbucks Stock in 2019 appeared first on InvestorPlace.
Starbucks Expands Its Delivery Service in the United StatesStarbucks’s announcement On January 22, after successfully testing a delivery service in Miami, Starbucks (SBUX) announced that it will expand the service to six more cities in the United
Can the coffee firm's recent run of success continue with Starbucks set to report its quarterly financial results after the closing bell Thursday?
Can SBUX Overcome the Chinese Slowdown to Post Robust Q1 Results?(Continued from Prior Part)Analysts’ recommendations Of the 33 analysts who follow Starbucks (SBUX), 48.5% have given it “buy” ratings, 48.5% have given it “hold” ratings, and
Can SBUX Overcome the Chinese Slowdown to Post Robust Q1 Results?(Continued from Prior Part) Analysts’ EPS expectations Analysts expect Starbucks’s (SBUX) adjusted EPS to rise 11.9% to $0.65 in the first quarter of fiscal 2019 compared to $0.58
Can SBUX Overcome the Chinese Slowdown to Post Robust Q1 Results?(Continued from Prior Part)Analysts’ revenue expectationsIn the first quarter of fiscal 2019, analysts expect Starbucks (SBUX) to post revenue of $6.49 billion, a rise of 6.8% from
Can SBUX Overcome the Chinese Slowdown to Post Robust Q1 Results?SBUX’s performanceStarbucks (SBUX) is expected to post its fiscal 2019 first-quarter earnings results after the market closes on January 24.As of January 17, the company’s stock
Did you hear that? That was the world's largest company, Apple (NASDAQ:AAPL), firing a warning shot about slowing growth in the world's hottest economy, China. Everyone heard the shot when it was first fired on January 2. Stocks across the board dropped. But now, less than two weeks later, everyone has seemingly forgotten about that warning shot, and stocks are in rally mode. That's fair. Stocks, by and large, are undervalued, and other risk factors are improving, such as the Fed becoming more dovish and U.S.-China trade talks progressing nicely. But, China's economy is still cooling, and that's bad news for companies with broad exposure to China, regardless of how other risk factors are playing out. One such company is retail coffee giant Starbucks (NASDAQ:SBUX). For all intents and purposes, due to dried up growth everywhere else, the Starbucks stock growth narrative is entirely centered around China. Given Apple's warning shot, that's a worrisome position to be in. Indeed, Goldman Sachs recently downgraded Starbucks stock to Neutral due to the company's broad exposure to the slowing China economy. Goldman actually warns that Starbucks could issue a warning like Apple about slowing growth in the near future. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Buy That Are Run By Billionaires Goldman hit the nail on the head with this downgrade. To warrant its current valuation, Starbucks stock needs everything to go right. But, because of Apple's warning, we know everything isn't going right in the most important region for the coffee giant. Thus, the current valuation seems due for compression based on weakening growth trends, and that's reason enough to stay away from Starbucks stock in the near term. ### Worrisome Exposure To China The core of the near-term bear thesis on Starbucks stock is that the company has a worrisome level of exposure to China, and that if growth in China falls apart, SBUX's long-term growth narrative will substantially weaken, causing the stock to drop meaningfully. It's not all bad news in China, though. This is still a 6%-plus growth economy. And, while Apple recently issued a big warning about slowing growth in China, Nike (NYSE:NKE) announced two weeks prior that its China business was red hot. My fear, however, is that Starbucks is on the Apple path in China, not the Nike path. Over the past several quarters, Nike's business has been heating up globally. Apple's business has been cooling. So has Starbucks' business. Thus, Nike's ability to maintain strong growth in China is more a function of outstanding operational momentum than anything else. Starbucks doesn't have that. Instead, Starbucks is more comparable to Apple in that growth is positive, but slowing from its multi-year trend. From this perspective, the present situation for Starbucks in China is most likely one defined by slowing growth. That's a big problem. Growth everywhere else is all dried up due to rising competition and saturation. Comparable sales growth in the U.S. has dropped from 5% and up a few years back, to 2% last year, with transaction volume actually down year-over-year. Europe, Middle East, and Africa comps have followed a similar trajectory, also with negative transaction volume growth last year. Thus, the SBUX growth narrative is all about China. If China falls apart, so does this growth narrative, meaning that if China numbers are weak next quarter (as they should be), then Starbucks stock will drop meaningfully. ### Valuation Has Room To Fall In relation to what is likely substantial sales pressure in China, the valuation on Starbucks stock is a tough pill to swallow. Starbucks stock trades at 24x forward earnings. That's below the stock's five-year forward multiple of 25. But, the company is also growing much less quickly today than it has over the past five years. Thus, a lower valuation is warranted. With respect to its peers, that 24 forward multiple actually seems stretched. The forward P/E multiple across the whole restaurant industry hovers right around 22. McDonald's (NYSE:MCD) trades at 22x forward earnings. Dunkin' (NYSE:DNKN) trades at 23x forward earnings. Yum (NYSE:YUM), Jack In The Box (NASDAQ:JACK), and El Pollo Loco (NASDAQ:LOCO) all trade around 18 to 23x forward earnings. Thus, relative to other mid-to-large cap restaurant names with fairly slow but stable growth, Starbucks stock still trades at a premium -- despite worrisome exposure to China. That means that if China's numbers do come in below expectations, SBUX stock could get hit by sizable valuation compression. * 10 A-Rated Stocks the Smart Money Is Piling Into ### Bottom Line on SBUX Stock Starbucks stock is a solid long-term holding given the company's staying power in a stable growth global retail coffee industry. But, at the present moment, the valuation seems overstretched with sizable operational risks on the horizon. That means the near to medium term outlook for this stock skews bearish, despite stable long term fundamentals. As of this writing, Luke Lango was long AAPL and NKE. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Key Emerging-Market Stocks to Buy for Contrarian Investors * 7 Stocks at Risk of the Global Smartphone Slowdown * 7 Pharmaceutical Stocks That Just Raised Prices This Year Compare Brokers The post Apple's Warning Is a Reason to Avoid Starbucks Stock appeared first on InvestorPlace.
Why Goldman Sachs Downgraded Starbucks Today ## Goldman Sachs’s downgrade Today, Goldman Sachs downgraded Starbucks (SBUX) from a “buy” to a “neutral” due to concerns about its expansion in China, Starbucks’s second-largest market. Goldman Sachs also lowered its price target from $75 to $68. The new price target represents a potential upside of 5.9% from the stock’s January 10 closing price of $64.19. As reported by CNBC, Goldman Sachs analyst Karen Holthouse wrote in a research note, “The recent AAPL [Apple] announcement (while potentially also product-driven) cited trade concerns/macro, and MCD [McDonald’s] acknowledged softer trends in the region at a late November event. The GS macro team also expects a continued slow down in GDP, at least partially driven by consumption.” ## Other analysts’ recommendations Of the 33 analysts that follow Starbucks, 48.5% are favoring “buys,” 48.5% are favoring “holds,” and 3.0% are favoring “sells” on the stock. On average, analysts have given SBUX a price target of $68.44, which represents a potential upside of 6.6% for the stock. Since the company’s investors meeting on December 13, Morgan Stanley, Barclays, Stifel, JPMorgan Chase, BMO, Wells Fargo, and RBC have all raised their price targets on its stock. On January 10, Morgan Stanley raised its price target from $64 to $70. Barclays raised its price target from $65 to $69 on December 19. ## Stock performance The downgrade appears to have negatively affected Starbucks stock. Today, it was trading down ~2.7% in premarket trading hours. Since the beginning of 2019, it’s fallen 0.3% as of its January 10 closing price. During the same period, its peers McDonald’s (MCD) and Dunkin’ Brands (DNKN) have returned 2.2% and 9.5%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests ~7.5% of its holdings in restaurant and travel companies, has returned 5.5% year-to-date.
NEW YORK, Jan. 10, 2019 -- In new independent research reports released early this morning, Market Source Research released its latest key findings for all current investors,.
Dunkin' is giving guests a great way to start 2019 with great value choices, offering its popular Dunkin' Go2s value menu to bring customers the chance to choose from three of the brand's popular breakfast menu items priced at $2, $4 and $5 for two of their go-to favorites. According to Tony Weisman, Chief Marketing Officer, Dunkin' U.S., "Offering favorite menu items at a great value is an important way Dunkin' stays such an integral part of our on-the-go guests' daily lives. To support Dunkin' Go2s, the brand has rolled out new advertising inspired by the rich, playful creativity, music and styles of the 1970s.
In the spirit of "new year, new you," Dunkin' is presenting an exciting new look to its product packaging, while welcoming both new and returning favorite menu items, to give the brand and its guests an energizing start to 2019. Last September, Dunkin' Donuts revealed plans to put the company on a first-name basis with America, in recognition of its long relationship with fans who have referred to the brand simply as "Dunkin'." As part of its rebranding efforts, in January Dunkin' will introduce bright and bold new product packaging that brings to life the energy and excitement of Dunkin's new brand identity.
CANTON, Mass., Jan. 3, 2019 /PRNewswire/ -- Baskin-Robbins, the world's largest chain of specialty ice cream shops, is ringing in 2019 with a brownie lover's dream come true. The January Flavor of the Month, Brownie Bar Mashup, is a delicious combination of traditional chocolate and blonde brownies. It delivers on two delicious brownie flavors in one bite.
Can Starbucks Maintain Its Upward Momentum in 2019? On average, analysts have set a 12-month price target of $68.64 on the stock, which represents a potential return of 8.8% from its current price of $63.08. Since Starbucks’s investor conference on December 13, during which the company outlined its long-term growth strategies, Barclays, JPMorgan Chase, Stifel, BMO, Wells Fargo, and RBC have raised their price targets on its stock.
Can Starbucks Maintain Its Upward Momentum in 2019? In fiscal 2018, Starbucks (SBUX) posted adjusted EPS of $2.42, a rise of 17.5% from $2.06 in fiscal 2017. Revenue growth, a lower effective tax rate, and share repurchases drove the company’s EPS during the period.
Can Starbucks Maintain Its Upward Momentum in 2019? In fiscal 2018, Starbucks (SBUX) posted an EBIT margin of 18.0% compared to 19.7% in fiscal 2017. Also, Starbucks’s licensing of its CPG and foodservice businesses to Nestlé contributed to the contraction in its EBIT margin in fiscal 2018.
Can Starbucks Maintain Its Upward Momentum in 2019? For fiscal 2019, analysts expect Starbucks (SBUX) to post revenue of $26.13 billion, a rise of 5.7% from $24.72 billion in fiscal 2018. For the same period, Starbucks’s management expects its consolidated revenue to rise 5%–7%, including a 2.0% fall from streamline-related activities.
Can Starbucks Maintain Its Upward Momentum in 2019? The net addition of 1,985 restaurants and global SSSG (same-store sales growth) of 2.0% drove the company’s revenue during the period. The net addition of 271 company-owned restaurants and 624 franchised restaurants along with positive SSSG of 2.0% drove the segment’s revenue during the period.
Despite weakness in the broader equity market, with the S&P 500 Index falling 7.7% in 2018, Starbucks (SBUX) has returned 9.8% YTD (year-to-date) as of December 26. Starbucks’s stock price has been driven by its strong fiscal 2018 fourth-quarter earnings, the announcement of the acquisition of a $900 million stake in the company by Bill Ackman’s Pershing Square Capital, and the optimism surrounding its management’s initiatives to drive its sales. In its fourth quarter, which ended on September 30, Starbucks outperformed analysts’ revenue and EPS expectations.