NASDAQ (SBUX)
A Roots Research Publication Q1 2023
As of 4/21/2023
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WHY WE ARE TALKING ABOUT THIS STOCK
DoorDash
● Starbucks (NASDAQ: SBUX) is a multinational chain of coffeehouses and roastery reserves, offering a variety of coffee, tea, bakery products, and more, with locations worldwide. ● The Company declared a quarterly cash dividend of $0.53 per share of outstanding Common Stock, payable on May 26, 2023, to shareholders of record on May 12, 2023. ● A National Labor Relations Board judge has ruled that Starbucks committed, “hundreds of unfair labor practices” in the Buffalo, New York, area while unionization efforts were attempting to take place. ● Starbucks launched Starbucks Odyssey Beta experience, powered by Web3 technology, in December to a select group of Starbucks Rewards members and partners in the US. The new experience offered new benefits and interactive activities called "Journeys." ● The Company plans to give back approximately $20 billion to shareholders by the end of fiscal 2025 through share repurchases and dividends.
In January, the Company announced that it was expanding its partnership with DoorDash to provide delivery services in select markets, including Northern California, Texas, Georgia, and Florida. The plan was to expand to additional markets over the coming months, with the goal of full nationwide availability in all 50 states by March 2023.
Industry
Sector
Starbucks Corporation returns capital to shareholders in the form of quarterly cash dividends, as well as a share repurchase program.
Consumer Cyclical
Restaurants
ABOUT THE COMPANY
● SHARES OUTSTANDING: ○ 1,149,300,000* ● LOCATION: ○ Seattle, Washington ● MISSION STATEMENT: ○ ● SOURCES OF REVENUE:
To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
○ Company-operated stores, licensed stores
● YEARS IN OPERATION: ○ Founded in 1971 ● THINGS TO NOTE: ○ The Company’s name was inspired by the classic tale, “Moby-Dick,” honoring the seafaring tradition of the early coffee traders
*Based on common publicly traded share class (NASDAQ: SBUX)
KEY POINTS
Item 1
The Roots
Company Metrics
Inside Ownership
Short Interest
Institutional Shares
Item 3
36,000 stores worldwide Growing quarterly dividend 2 Billion in sitting cash from deposits into the starbucks mobile app
Market Cap:
124.3B 1.96%
931,258,721 Shares
23,352,813 Shares
11,670,000 Current Shares Short
Dividend:
Beta:
0.94 37.57
Item 2
81.03% Overall
2.03% Overall
1.04% Overall
PE Ratio:
SBUX Monthly Chart
Post-COVID growth has kept theme with overall market volatility. The notable exception is gains have been nearly-exclusively on low Volume*. Increases in trading line up with losses each time. This is reflected in reduced RSI* upper limits.
* Link to the definition of pattern
SBUX Weekly Chart
Heavier Resistance* above $112 will require stronger Support* to press above. Volume, historically, will dictate how that plays out. Widening EMA* spread creates a point of concern as this has preceded losses in the past. As rejection here would retest Support established at $88. Gains above $112 indicate a return to the cyclical growth to $130.
* Link to the definition of pattern
PREVIOUS MARKET SENTIMENT / REACTIONS
OPENING PRICE
HIGH OF DAY
LOW OF DAY
CLOSING PRICE
TRADING VOLUME
DATE
EVENT*
02/02/2023
110.04
110.83
107.98
109.15
9,852K
Starbucks Reports Q1 Fiscal 2023 Results
03/20/2023
99.10
100.22
98.93
99.85
4,864K
Laxman Narasimhan Assumes Role of Starbucks CEO
04/03/2023
104.06
104.94
103.67
104.85
3,855K
Starbucks Declares Quarterly Cash Dividend
04/12/2023
106.24
106.58
105.35
105.60
4,606K
Appoints Brad Lerman as EVP and General Counsel
Price action rarely shows an appreciable change for general news and corporate actions. Financial statements and earnings reports result in volume increases along with stock value sentiment matching the positive or negative results in the report. ● In the 3 trading days prior to 02/02/2023, price movement was overall sideways. In the three trading days after, price movement went down . ● In the 3 trading days prior to 03/20/2023, price movement was overall sideways. In the three trading days after, price movement went sideways. ● In the 3 trading days prior to 04/03/2023, price movement was overall up. In the three trading days after, price movement went sideways . ● In the 3 trading days prior to 04/12/2023, price movement was overall sideways . In the three trading days after, price movement went up .
*Events have a hyperlink for information specific to that day
Earnings Report for Q1 FY23*
Jan 1, 2023
Oct 2, 2022
Items to Note Items to Note Starbucks reported a 5% increase in global comparable store sales driven by a 7% increase in average ticket. North America and U.S. comparable store sales increased by 10%, while international comparable store sales decreased by 13% ● Thing 1 ● Starbucks opened 459 new stores in Q1, with a total of 36,170 stores Thing 2 worldwide. 61% of the global portfolio is in the US and China. Consolidated net revenue rose 8%, reaching a record $8.7 billion, with a 3% negative impact from foreign currency translation. In Q1, the GAAP operating margin was 14.4%, while non-GAAP operating margin was 14.5%, both decreased from the prior year. GAAP earnings per share were $0.74, which grew 7% over the prior year, including an estimated $0.06 dilutive impact from China.
ASSETS Cash and cash equivalents
3,186.5 6,934.9 28,256.1 2,089.6 9,246.2 6,551.3
2,818.4 7,018.7 27,978.4 2,137.1 9,151.8 6,134.4 2,711.0 538.0 4,060.3 7,309.3 1,482.2
Total current assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable
Deployment
Total current liabilities
Total revenues
COST AND EXPENSES Product and distribution costs General and administrative Store operating expenses Total Operating Expenses
2,810.2
396.1
3,665.3 7,518.6 1,253.1
Operating Income
NET LOSS/GAIN PER SHARE Diluted net (loss)/gain per share
855.2
878.3
WEIGHTED AVERAGE SHARES USED IN CALCULATING: Basic net loss/gain per share
N/A 0.74
N/A 0.76
Diluted net loss/gain per share
*Link to the company's most recent 10-Q Form. Amounts in thousands except per-share data.
INSIDER TRADING
Shares Outstanding: 1,149,300,000
Former CEO Howard Schultz and Dir. Mellody Hobson both are the main purchases listed here, making over 25% and 10% gain respectively.
Insider Shares: 23,352,813
Insider Ownership: 2.03%
Insiders are a company's officers, directors, relatives, or anyone else with access to key company information before it's made available to the public. Insider Trading refers to these people and their purchases, sales or exercise of options contracts.
INSTITUTIONAL OWNERSHIP Institutional Owners*: 3349;
with 3276 Long, 15 Short, 58 Long & Short Shares Outstanding: 1,149,300,000 Institutional Shares: 932,005,753 Institutional Value: 100,833,702,417
Top 3 Institutional Owners: Vanguard Group Inc: 105,626,376 BlackRock Inc.: 76,088,457 State Street Corp : 43,984,541
*Institutional ownership is the amount of stock owned by large entities that manage funds on behalf of others. Stocks with a large amount of institutional ownership are often looked upon favorably. Shares outstanding are the total amount of shares issued by the company
SHORT INTERES T Latest Market Date: 04/21/2023 Market Date
Short Volume Ratio
Short Volume Total Volume (In Millions)
Short Volume:
621,760
04/20/23
353,627
1,211,342
29.19
04/19/23
297,868
1,546,253
19.26
Market Volume: 1,330,616
04/18/23
481,061
1,597,637
30.11
Short Volume Ratio:
46.73
04/17/23
420,277
1,384,341
30.36
Short Shares Availability: 10,000,000
04/14/23
343,699
1,122,771
30.61
Short Borrow Fee Rate (%): 0.25
04/13/23
296,377
1,193,319
24.84
Why is this important : A reduction in the percentage of short float typically represents optimism in the company by the stock market from a larger viewpoint
CONCLUSION Starbucks Corporation (Nasdaq:SBUX) is a food and beverage company that focuses on the coffee and food sales Starbucks' strong brand recognition, global presence, and digital capabilities provide it with several advantages in the competitive coffee industry. However, the company faces challenges in maintaining quality and differentiating itself from its competitors. To sustain its growth and profitability, Starbucks will need to continue innovating its menu and digital capabilities, expanding into emerging markets, and addressing growing demands for sustainability and healthier options.
Threats ● Fluctuations in foreign exchange rates and political instability in certain markets could impact the company's global operations. ● Potential supply chain disruptions due to natural disasters, political unrest, or other external factors.
Strengths ● Point program retains liquid income ● Robust digital capabilities, including a mobile app, rewards program, and mobile ordering. ● Well-established supply chain and distribution network.
Opportunities ● Growing demand for plant-based and healthy food options, which Starbucks has started to incorporate into its menu. ● Expansion into emerging markets, particularly in Asia and Africa. ● Opportunities to innovate its menu and digital capabilities to appeal to younger generations.
Weaknesses ● Company typically experiences seasonally lower revenue and operating income in the second fiscal year. ● Dependence on the US market for a significant portion of its revenue. ● High competition in the industry, particularly from local coffee shops and fast-food chains.
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Published by Roots Research, LLC. on April 24th, 2023
REFERENCES Why We Are Talking About This Stock - “FORM 10-K.” SEC EDGAR, 2 Feb. 2023, www.sec.gov/ix?doc=%2FArchives%2Fedgar%2Fdata%2F0000829224%2F000082922423000017%2Fsbux-20230101.htm. “Starbucks Declares Quarterly Cash Dividend.” Starbucks.com, 2017, investor.starbucks.com/press-releases/financial-releases/press-release-details/2023/Starbucks-Declares-Quarterly-Cash-Dividend/default.aspx. "Starbucks violated labor laws in anti-union campaign, National Labor Relations Board says." USA Today, Gannett Satellite Information Network, 2 Mar. 2023, https://www.usatoday.com/story/money/2023/03/02/starbucks-violated-labor-laws-unionization/11381196002/. About the Company - “FORM 10-K.” SEC EDGAR, 2 Feb. 2023, www.sec.gov/ix?doc=%2FArchives%2Fedgar%2Fdata%2F0000829224%2F000082922423000017%2Fsbux-20230101.htm. “SCHEDULE 14A.” SEC EDGAR, 27 Jan. 2023, www.sec.gov/Archives/edgar/data/829224/000082922423000007/a2023proxystatementfinal.htm. “About Us: Starbucks Coffee Company.” @Starbucks, Starbucks, 2023, www.starbucks.com/about-us/. Key Points- Starbucks. Fiscal 2022 Annual Report . 2022. “SBUX Institutional Ownership and Shareholders - Starbucks Corp. (NASDAQ) Stock.” Fintel.io, 2023, fintel.io/so/us/sbux. Accessed 24 Apr. 2023. “SBUX Insider Trading - Starbucks Corp.” Fintel.io, 2019, fintel.io/n/us/sbux. Accessed 24 Apr. 2023. “Short Interest Stock Short Selling Data, Shorts, Stocks: Short Squeeze.” Shortsqueeze.com, 2023, shortsqueeze.com/?symbol=sbux. Accessed 24 Apr. 2023. “Starbucks Announces Q2 Fiscal Year 2023 Results Conference Call.” Starbucks.com, 2023, investor.starbucks.com/press-releases/financial-releases/press-release-details/2023/Starbucks-Announces-Q2-Fiscal-Year-2023-Results-Conference-Call/default.aspx. Accessed 23 Apr. 2023. Previous Market Sentiment - “Starbucks Investor Relations - Press Releases” https://investor.starbucks.com/press-releases/financial-releases/default.aspx “Price Movement” https://finance.yahoo.com/quote/sbux/history/ Earnings Report - Starbucks Corporation. “Starbucks Reports Q1 Fiscal 2023 Results.” Starbucks Investor Relations, 2 Feb. 2023, https://investor.starbucks.com/press-releases/financial-releases/starbucks-reports-q1-fiscal-2023-results. Insider Trading - “SBUX Insider Trading - Starbucks Corp.” Fintel.io, 2019, fintel.io/n/us/sbux. Accessed 24 Apr. 2023. Institutional Ownership - “SBUX Institutional Ownership and Shareholders - Starbucks Corp. (NASDAQ) Stock.” Fintel.io, fintel.io/so/us/sbux. Accessed 22 Apr. 2023. Short Interest - “Starbucks Short Interest Ratio and Volume (NASDAQ:SBUX).” Www.marketbeat.com, www.marketbeat.com/stocks/NASDAQ/SBUX/short-interest/. Accessed 22 Apr. 2023. “SBUX - Short Interest - Starbucks Corp. (NASDAQ) Stock - Short Squeeze, Borrow Rates.” Fintel.io, fintel.io/ss/us/sbux. Accessed 22 Apr. 2023. Conclusion - “Laxman Narasimhan Assumes Role of Starbucks Chief Executive Officer.” Starbucks.com, 2017, investor.starbucks.com/press-releases/financial-releases/press-release-details/2023/Laxman-Narasimhan-Assumes-Role-of-Starbucks-Chief-Executive-Officer/default.aspx. Accessed 24 Apr. 2023. “Starbucks Reports Q1 Fiscal 2023 Results.” Starbucks.com, 2023, investor.starbucks.com/press-releases/financial-releases/press-release-details/2023/Starbucks-Reports-Q1-Fiscal-2023-Results/default.aspx. Accessed 24 Apr. 2023. “Starbucks Announces Q2 Fiscal Year 2023 Results Conference Call.” Starbucks.com, 2023, investor.starbucks.com/press-releases/financial-releases/press-release-details/2023/Starbucks-Announces-Q2-Fiscal-Year-2023-Results-Conference-Call/default.aspx. Accessed 24 Apr. 2023. Starbucks. Fiscal 2022 Annual Report . 2022.
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