Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500

Starbucks Corporation
Recommendation Price 12-Mo. Target Price Report Currency Investment Style
BUY « « « « « USD 98.70 (as of market close Mar 17, 2023) USD 121.00 USD Large-Cap Blend
Equity Analyst Siye Desta

GICS Sector Consumer Discretionary Summary Starbucks is the world's leading retailer of high-quality coffee products, sold through more
Sub-Industry Restaurants than 34,900 retail stores globally and multiple retail channels.

Key Stock Statistics (Source: CFRA, S&P Global Market Intelligence (SPGMI), Company Reports)
52-Wk Range USD 110.83 - 68.39 Oper.EPS2023E USD 3.44 Market Capitalization[B] USD 113.44 Beta 0.94
Trailing 12-Month EPS USD 2.99 Oper.EPS2024E USD 4.06 Yield [%] 2.15 3-yr Proj. EPS CAGR[%] 43
Trailing 12-Month P/E 33.01 P/E on Oper.EPS2023E 28.69 Dividend Rate/Share USD 2.12 SPGMI's Quality Ranking B+
USD 10K Invested 5 Yrs Ago 18,514.0 Common Shares Outstg.[M] 1,148.00 Trailing 12-Month Dividend USD 2.04 Institutional Ownership [%] 73.0

Price Performance Analyst's Risk Assessment

LOW MEDIUM HIGH

Our risk assessment reflects uncertainties regarding the
full impact of the pandemic, especially the pace of China’s
recovery following the end of its travel restrictions and
inflationary pressure on labor costs and/or commodity
costs. Also, we note intense competition in the restaurant
industry and threats from specialty coffee offerings by
competitors. Conversely, in recent years, we think the
company has reinvigorated its brand by improving its
services and offering premium bakery goods. Also, the
company has significant financial strength with ample
liquidity and financial flexibility.

Revenue/Earnings Data

Revenue (Million USD)

1Q 2Q 3Q 4Q Year
2024 E 9,760 E 9,493 E 10,399 E 10,554 E 40,206
2023 8,714 E 8,552 E 9,454 E 9,508 E 36,228
Source: CFRA, S&P Global Market Intelligence
2022 8,050 7,635 8,150 8,414 32,250
Past performance is not an indication of future performance and should not be relied upon as such.
2021 6,749 6,670 7,120 7,966 28,616
Analysis prepared by Siye Desta on Feb 06, 2023 01:11 AM ET, when the stock traded at USD 104.30.
2020 7,097 5,996 4,222 6,203 23,518
2019 6,633 6,306 6,823 6,747 26,509
Highlights Investment Rationale/Risk
Earnings Per Share (USD)
u We project strong revenue growth aided by u Our Buy recommendation reflects our view that,
contributions from pricing, comparable store at current levels, the shares are undervalued vs 1Q 2Q 3Q 4Q Year
sales growth, and net new stores, partially peers and historical averages. Dec-Q results 2024 E 0.93 E 0.84 E 1.15 E 1.14 E 4.06
offset by weakness in the China market through were mixed, given the negative impact of China, 2023 0.75 E 0.68 E 1.01 1.11 E 3.44
1H 2023. Also, we note SBUX expects FY 23 with net revenues up 8% and global comp sales 2022 0.72 0.59 0.84 0.81 2.96
global comp sales growth in the U.S. to be near up 5%. We think FY 23 will be a pivotal year for 2021 0.61 0.62 1.01 1.00 3.24
the high end of 7% to 9%, along with a SBUX as it contends with inflationary pressures, 2020 0.79 0.32 -0.46 0.51 1.17
meaningful sales rebound in China in the back labor challenges, and an acute slowdown in 2019 0.75 0.60 0.78 0.70 2.83
half of FY 23. SBUX plans to increase its U.S. China, with January comparable sales at -15% Fiscal Year ended Sep 30. EPS Estimates based on CFRA's
store count by about 3% in FY 23, while Y/Y. Over the long term, we expect SBUX to Operating Earnings; historical earnings are adjusted. In periods
expanding its footprint in China with net new revert to its targets of 4% to 5% growth in where a different currency has been reported, this has been
unit growth of 13%. Overall, global store growth global comparable sales and low double-digit adjusted to match the current quoted currency.
is expected to be 7% (75% outside the U.S.). EPS growth, with likely further improvement in
With this level of new store openings and comp return on invested capital. Dividend Data
sales, we expect revenue growth of 12% in FY u Risks to our recommendation and target price Amount Date Ex-Div. Stk. of Payment
23. include a prolonged negative impact of the ( USD) Decl. Date Record Date
u We project adjusted operating margin of 15.6% pandemic, mainly in China; prolonged inflation 0.5300 Nov 18 Feb 09 Feb 10 Feb 24 '23
in FY 23, an increase from 15.1% in FY 22, but a in labor costs (wage pressures) and/or 0.5300 Sep 09 Nov 09 Nov 11 Nov 25 '22
notable contraction from 18.1% in FY 21, partly commodity prices; a sharp slowdown in global 0.4900 Jun 22 Aug 11 Aug 12 Aug 26 '22
reflecting higher labor costs and commodity consumer spending; foreign currency exposure. 0.4900 Mar 15 May 12 May 13 May 27 '22
costs. We expect margin compression in Q2, u Our 12-month target price is $121, 35.1x our FY
followed by a strong rebound in 2H 2023, Dividends have been paid since 2010 . Source: Company reports
23 EPS, in line with SBUX’s five-year average
however, this is highly dependent on China’s Past performance is not an indication of future performance
forward P/E of 35x. On Sep-Q’s earnings call, and should not be relied as such.
recovery and efficiency gains. SBUX reaffirmed a 50% dividend payout ratio Forecasts are not a reliable indicator of future performance.
u After depreciation and amortization, interest, target and announced the resumption of its Dividends paid in currencies other than the Trading currency have
and a projected effective tax rate of 24% to buyback program in FY 23, with an expected been accordingly converted for display purposes.
25%, and with some share buybacks, we benefit of about 1% to EPS starting in 2024.
forecast EPS of $3.44 in FY 23 and $4.06 in FY
24.

Redistribution or reproduction is prohibited without written permission. Copyright © 2023 CFRA. This document is not intended to provide personal investment advice and it does not take into account the specific investment
objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek independent financial advice regarding the suitability and/or appropriateness of making an investment
or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such investments, if any,
may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any impact this investment may have on
their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an investment decision. Unless
otherwise indicated, there is no intention to update this document.
1
Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Business Summary Oct 21, 2022 Corporate information

CORPORATE OVERVIEW. Starbucks is the world’s largest roaster, marketer, and retailer of specialty coffee in Investor contact
the world. The company’s flagship brand is Starbucks Coffee, but it also sells good and services under the T. Willis (206 447 1575)
brands Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi.
As of FY 21, the company had over 33,833 stores and operated in 84 markets globally. In its company Office
operated stores (17,133 stores, 85% of total sales, 28.4% Y/Y growth in FY 21), the company purchases and 2401 Utah Avenue South, Seattle, Washington, 98134
roasts high-quality coffees that it sells along with hand-crafted coffee, tea, and other beverages (74% of
Telephone
total sales), food items (21%), and other items (5%). The company also sells and licenses its trademarks
206 447 1575
through other channels, which include its licensed stores (16,700 stores, 9.23% of total sales, 15.3% Y/Y
growth in FY 21) and other revenue generated outside of its stores (N/A, 6.09%, -12.6%). Fax
The company has three reportable segments, which include North America, International, Channel N/A
Development, and one non-reportable operating segment, Corporate and Other. The North America segment
Website
(16,826 stores, 49.73% of total stores, 70.36% of total sales, 25.48% growth Y/Y in FY 21), which is
www.starbucks.com
comprised of both company-operated and licensed stores sales in North America and Canada, is the
company’s most mature segment. The International segment (17,007, 50.27%, 23.82%, 32.33%) is
comprised of China, Japan, Asia Pacific, Europe, Middle East, Latin America, and Africa company-operated Officers
and licensed stores. The company’s Channel Development segment (N/A, N/A, 5.48%, -17.25%) generates Founder, Interim CEO & Executive VP, CFO &
revenue from coffees, single-serve products, ready-to-drink beverages, foodservice products, and other Director Principal Accounting
branded products outside of its company-operated and licensed stores. A large portion of this segment H. D. Schultz Officer
operates under a licensed model of the Global Coffee Alliance with Nestlé, in which Nestlé markets, sells, and R. Ruggeri
distributes Starbucks’s packaged coffee and tea in all global at-home and away-from-home channels. The Executive VP, CFO &
company also operates under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Principal Accounting Interim Executive VP &
Co., Ltd., Arla Foods amba, and others for its global ready-to-drink business. The Corporate and Other Officer General Counsel
segment (N/A, N/A, 0.34%, 47.28%) includes non-reportable operating segments like the company’s R. Ruggeri Z. M. Jenkins
Evolution Fresh and unallocated corporate expenses. Independent Non- Chief Executive Officer -
As of October 3, 2021, Starbucks employed approximately 383,000 people worldwide. In the U.S., Starbucks Executive Chair Elect
employed approximately 245,000 people, with roughly 235,000 in company-operated stores. Approximately M. L. Hobson L. Narasimhan
138,000 employees were employed outside of the U.S., with roughly 135,000 in company-operated stores.
CORPORATE STRATEGY. The company’s objective is to maintain its position as one of the most recognized Board Members
brands in the world that is focused on being profit-positive, people-positive, and planet-positive. The A. Campion J. C. Ramo
company’s long-term growth model is to continue with net new store openings, increase comparable sales,
and improve its margin management to achieve this. C. Shih J. V. Knudstorp
As result, the company plans to continue the expansion of its new stores in existing markets like the U.S. C. Wong M. L. Hobson
and higher growth markets like China while optimizing its North American store portfolio through its H. D. Schultz R. E. Allison
restricting plan announced in FY 20. The company also plans to offer more drive-thru and alternative format I. Ge Mahe S. Nadella
stores, since prior to the Covid-19 pandemic approximately 80% of Starbucks transactions in U.S. company-
operated stores were “on-the-go” occasions. In more dense metropolitan areas, this should provide a more
streamlined customer experience and increase comparable sales. Domicile Auditor
However, the company also anticipates margin pressure in FY 22 - from a higher wage investment, amid the Washington Deloitte & Touche LLP
increased unionization efforts by its employees and labor market tightness more broadly, along with higher Founded
supply chain costs. 1971
The company’s board also announced its plan to replace the formerly long tenured and now interim CEO,
Howard Schultz, in the second half of 2022. Employees
402,000
FINANCIAL TRENDS. Starbucks’ total net revenues increased 24% to 29.1 billion in FY 21 from 23.5 billion in
FY 20, while five-year compound annual growth rate (CAGR) in revenue was 13.66% as of FY 21. Global Stockholders
comparable store sales increased 20%, primarily driven by a 10% increase in average ticket and a 9% 18,000
increase in comparable transactions.
North America’s comparable store sales increased to 22% for fiscal 2021 compared to a decline of 12% in
fiscal 2020, driven by a 13% increase in average ticket and a 7% increase in transactions. The company also
benefitted from lapping the severe Covid-19 impact, the optimization of sales due to company’s store
openings and closures, higher licensee sales and royalties, and favorable FX translations. For the
International segment, comparable store sales increased by 16% for fiscal 2021 compared to a decline of
19% in fiscal 2020. Comparable store sales for its China market increased 17%. The lower comparable sales
difference in the International segment vs. the U.S. was attributed to Covid-19-related restrictions.
Revenue for the company’s Channel Development segment declined 17% when compared with fiscal 2020.
This was largely due to the transition of certain single-serve product activities to Nestlé beginning in the
fourth quarter of fiscal 2020 and was partially offset by growth in its ready-to-drink business.
Adjusted operating income for the company increased to 4.87 billion (16.76% margin) in FY 21 from 1.56
billion (6.64%) in FY 20, due to the reason mentioned above along with margin maintenance over the year.

Redistribution or reproduction is prohibited without prior written permission. Copyright © 2023 CFRA. 2
Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Quantitative Evaluations Expanded Ratio Analysis

Fair Value Rank 1 2 3 4 5 2022 2021 2020 2019

Lowest Highest Price/Sales 3.03 4.61 4.24 4.11
Based on CFRA's proprietary quantitative model, Price/EBITDA 16.34 21.50 32.11 20.31
stocks are ranked from most overvalued (1) to most Price/Pretax Income 23.07 24.99 85.56 24.40
undervalued (5). P/E Ratio 28.47 34.85 72.05 31.23
Avg. Diluted Shares Outstg. (M) 1,158.50 1,185.50 1,181.80 1,233.20
Fair Value USD Analysis of the stock’s current worth, based on CFRA’s
Calculation 82.45 proprietary quantitative model suggests that SBUX is Figures based on fiscal year-end price
overvalued by USD 16.25 or 16.46%

Volatility LOW AVERAGE HIGH

Key Growth Rates and Averages
Technical BULLISH Since January, 2023, the technical indicators for SBUX
Past Growth Rate (%) 1 Year 3 Years 5 Years
Evaluation have been BULLISH"
Net Income NM NM 2.61
Insider Activity UNFAVORABLE NEUTRAL FAVORABLE Sales 10.98 6.75 7.57

Ratio Analysis (Annual Avg.)

Net Margin (%) 10.18 9.52 12.09
% LT Debt to Capitalization 86.81 81.76 111.43
Return on Equity (%) -46.86 -41.37 -26.02

Company Financials Fiscal year ending Sep 30

Per Share Data (USD) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Tangible Book Value -10.58 -7.92 -10.19 -8.87 -2.61 2.42 2.50 2.51 2.76 2.22
Free Cash Flow 2.22 3.84 0.10 2.65 7.20 1.89 2.21 1.63 -0.37 1.17
Earnings 2.83 3.54 0.79 2.92 3.24 1.97 1.90 1.82 1.35 0.01
Earnings (Normalized) 2.96 3.24 1.17 2.83 2.42 2.06 1.91 1.58 1.33 1.10
Dividends 2.00 1.84 1.68 1.49 1.32 1.05 0.85 0.68 0.55 0.44
Payout Ratio (%) 68.97 50.46 207.00 48.94 38.59 50.28 41.81 33.68 37.87 NM
Prices: High 117.80 126.32 94.13 99.72 61.94 64.87 64.00 59.32 41.25 38.92
Prices: Low 68.39 85.45 50.02 54.70 47.37 50.84 52.63 35.38 33.96 22.14
P/E Ratio: High 39.80 39.00 80.50 35.20 25.60 31.50 33.50 37.50 31.00 35.40
P/E Ratio: Low 23.10 26.40 42.80 19.30 19.60 24.70 27.60 22.40 25.50 20.10

Income Statement Analysis (Million USD)

Revenue 32,250 29,061 23,518 26,509 24,720 22,387 21,316 19,163 16,448 14,867
Operating Income 4,444 4,702 1,600 3,916 3,810 3,897 3,854 3,351 2,793 2,207
Depreciation + Amortization 1,529 1,524 1,503 1,449 1,306 1,067 1,030 934.00 748.00 656.00
Interest Expense 483.00 473.00 437.00 331.00 170.00 92.00 81.00 70.00 64.00 28.00
Pretax Income 4,232 5,357 1,164 4,466 5,780 4,318 4,199 3,903 3,160 -230.00
Effective Tax Rate 22.40 21.60 20.60 19.50 21.80 33.20 32.90 29.30 34.60 103.80
Net Income 3,282 4,199 928.00 3,599 4,518 2,885 2,818 2,757 2,068 8.00
Net Income (Normalized) 2,681 2,940 953.70 2,491 2,586 2,738 2,619 2,235 1,920 1,546

Balance Sheet and Other Financial Data (Million USD)

Cash 3,183 6,618 4,632 2,757 8,938 2,691 2,263 1,611 1,844 3,234
Current Assets 7,019 9,756 7,806 5,654 12,494 5,283 4,758 3,971 4,169 5,471
Total Assets 27,978 31,393 29,375 19,220 24,156 14,366 14,313 12,416 10,753 11,517
Current Liabilities 9,152 8,151 7,347 6,169 5,684 4,221 4,547 3,648 3,039 5,377
Long Term Debt 13,154 13,618 14,729 11,170 9,123 3,933 3,185 2,348 2,048 1,299
Total Capital 15,152 18,292 17,529 4,939 10,648 9,390 9,476 8,167 7,322 5,782
Capital Expenditures 1,841 1,470 1,484 1,807 1,976 1,519 1,440 1,304 1,161 1,151
Cash from Operations 4,397 5,989 1,598 5,047 11,938 4,252 4,698 3,749 608.00 2,908
Current Ratio 0.77 1.20 1.06 0.92 2.20 1.25 1.05 1.09 1.37 1.02
% Long Term Debt of Capitalization 86.80 74.40 84.00 226.20 85.70 41.90 33.60 28.70 28.00 22.50
% Net Income of Revenue 10.20 14.50 3.90 13.60 18.30 12.90 13.20 14.40 12.60 0.10
% Return on Assets 9.36 9.67 4.12 11.28 12.36 16.98 18.02 18.08 15.67 13.98
% Return on Equity -46.90 -64.10 -13.20 NM 136.20 50.80 48.10 49.70 42.40 0.20

Source: S&P Global Market Intelligence. Data may be preliminary or restated; before results of discontinued operations/special items. Per share data adjusted for stock dividends; EPS diluted.
E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

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Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Sub-Industry Outlook Industry Performance

Our 12-month fundamental outlook for the
restaurant sub-industry is neutral. For the year
ahead, we think restaurant operators will see a
sequential improvement in sales from higher
pricing and positive tailwind effects from digital
sales adoption, lower commodity costs, along with
China’s end to its “zero-Covid” policy. However, we
also expect foot traffic to remain soft on a yearly
basis, as consumers become more cost conscious
due to menu price increases and possibly a
recession.
Over the past year, most restaurants have had to
raise their prices to deal with pressures on
margins, mainly from wages and food input costs.
Fortunately, many of these cost pressures have
moderated, which we expect to continue through
the first half of 2023, although we also expect
many of these costs to remain above pre-
pandemic levels, barring a recession. Additionally,
we expect labor costs will remain a challenge
given the tight labor market, with pressure to
wages and the availability of workers.
As a result, we expect to see some demand
softness as consumers face more financial strain,
while restaurants slow menu price hikes to
support sales growth. Moreover, the value
proposition of home cooked meals compared to
eating out has improved recently. This can be seen
in the tighter spread between the Food Away from
Home CPI Index and the Food at Home CPI Index
since August 2022, with the Food at Home CPI
Index falling more precipitously than the Food
Away from Home CPI Index. However, while the
spread has tightened, the moderation of the Food
Away from Home CPI Index should support growth
in food away from home spending. According to
the U.S. Census Bureau, Monthly Total Retail Sales
for Food Services and Drinking Places (Seasonally
Adjusted) decreased by 0.9% MoM in December
2022.
In our view, we expect this trend to continue as
consumers continue to spend on food away from
home, but also trade down and make more meals
at home. Additionally, as consumers become more
cost sensitive, we think it will likely impact certain
segments of the restaurant sub-industry more GICS Sector: Consumer Discretionary
negatively than others. We think many of the Sub-Industry: Restaurants
companies in the more fragmented segments, Based on S&P 1500 Indexes
like full-service restaurants (FSR), will likely Five-Year market price performance through Mar 18, 2023
find it most difficult to maintain sales and
earnings growth. However, this should bode
well for other segments, like quick service
restaurants (QSR) and some fast casual
restaurants, as consumers opt for their more
value-oriented food items. Many of the large
companies within the QSR segment also have a
larger global footprint, which will likely impact
their respective outlooks differently. In our
opinion, companies with an outsized presence
in China, will likely benefit in the near term as
China ends its “zero-Covid” policy, however,
this may reignite inflationary pressures.
On a brighter note, we see further digital
traction across the industry, with many
restaurant operators reporting continued
growth in off-premises sales and pre-orders
for on-premises meals. In our view, restaurant
companies with strong growth runway in digital
sales and advancements in their digital
infrastructure stand to benefit the most.
Through January 13, 2023, the S&P 1500
Restaurants Index rose 5.0% vs. the 8.3% rise
for the S&P 1500 Consumer Discretionary
Index and 4.3% rise for the S&P 1500
Composite Index. In 2022, the S&P 1500
Restaurants Index fell 10.6% vs. the 36.3%
drop in the broader S&P 1500 Consumer
Discretionary Index and the 19.1% drop in the NOTE: A sector chart appears when the sub-industry does not have
sufficient historical index data.
S&P 1500 Composite Index.
All Sector & Sub-Industry information is based on the Global Industry
/ Siye Desta Classification Standard (GICS).
Past performance is not an indication of future performance and should
not be relied upon as such.
Source: CFRA, S&P Global Market Intelligence

Sub-Industry: Restaurants Peer Group*: Restaurants

Recent 30-Day 1-Year Fair Return
Stock Stock Stk. Mkt. Price Price P/E Value Yield on Equity LTD to
Peer Group Symbol Exchange Currency Price Cap. (M) Chg. (%) Chg. (%) Ratio Calc. (%) (%) Cap (%)

Starbucks Corporation SBUX NasdaqGS USD 98.70 113,436.0 -9.4 12.6 33.0 82.45 2.1 -38.8 86.9
Aramark ARMK NYSE USD 33.67 8,771.0 -13.5 -8.0 39.0 N/A 1.3 7.6 67.7
Chipotle Mexican Grill, Inc. CMG NYSE USD 1,608.84 44,439.0 -2.9 2.9 49.0 1,594.33 N/A 38.5 N/A
Darden Restaurants, Inc. DRI NYSE USD 148.50 18,073.0 1.2 13.8 20.0 128.76 3.3 39.9 11.0
Domino's Pizza, Inc. DPZ NYSE USD 310.67 11,004.0 -13.7 -24.1 25.0 305.82 1.6 -10.8 460.5
McDonald's Corporation MCD NYSE USD 267.20 195,456.0 0.2 12.5 26.0 196.48 2.3 -116.5 84.1
Restaurant Brands International Inc. QSR TSX CAD 83.67 25,882.0 26.6 44.6 19.0 58.23 2.6 36.5 68.6
Restaurant Brands International Limited Partnership RSTR.F OTCPK USD 63.70 29,066.0 -5.0 12.7 15.0 N/A N/A 36.5 68.6
Texas Roadhouse, Inc. TXRH NasdaqGS USD 105.32 7,058.0 1.0 27.9 27.0 N/A 2.1 26.4 2.8
Yum China Holdings, Inc. YUMC NYSE USD 60.72 25,400.0 2.7 40.1 57.0 48.58 0.9 6.3 N/A
Yum! Brands, Inc. YUM NYSE USD 126.85 35,532.0 -3.7 6.6 28.0 76.45 1.9 -15.4 301.3

*For Peer Groups with more than 10 companies or stocks, selection of issues is based on market capitalization.
NA-Not Available; NM-Not Meaningful.
Note: Peers are selected based on Global Industry Classification Standards and market capitalization. The peer group list includes companies with similar characteristics, but may not include all the companies within the same
industry and/or that engage in the same line of business.

Redistribution or reproduction is prohibited without prior written permission. Copyright © 2023 CFRA. 4
Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Analyst Research Notes and other Company News
February 03, 2023
09:51 AM ET... CFRA Maintains Buy Opinion on Shares of Starbucks Corporation
(SBUX 109.15****):
We lift our 12-month target to $121 from $103, 35.1x FY 23 (Sept.) EPS, in line with
SBUX’s five-year average forward P/E. We leave our 2023 EPS view unchanged at
$3.44, but we raise our 2024 EPS estimate to $4.06 from $4.03. SBUX posts FQ1
(Dec.) EPS of $0.75, $0.02 below consensus. Revenue of $8,714M (+8.2% Y/Y) was
$69M below consensus. Adj-operating income grew 3.8%, but margin contracted 60
bps to 14.5% vs. 14.7% consensus. Global comparable store sales grew 5% vs. 8%
consensus, primarily driven by higher pricing. Outside of China, SBUX posted strong
sales growth (+25%) and comp sales (+11%). However, the negative impact of
China was 4x worse than SBUX expected (-29% comp sales; $0.06 negative EPS
impact). Yet, SBUX reaffirmed FY 23 guidance, as it expects a strong recovery in
China in 2H 2023. While we have concerns over the pace of China’s recovery, we
remain constructive on SBUX’s overall sales trends and reinvention plans. We note
an 8% drop in turnover and higher throughput from recent investments. / Siye Desta
November 04, 2022
10:17 AM ET... CFRA Maintains Buy Opinion on Shares of Starbucks (SBUX
92.02****):
We keep our 12-month target at $103, 30x our FY23 (Sept.) EPS, a discount to
SBUX’s five-year forward P/E of 35x. We raise our FY23 EPS by $0.14 to $3.44 and
we initiate FY24 at $4.03. F4Q (Sep-Q) adj-EPS of $0.81 (-18% Y/Y) beat by $0.09
on revenues of $8,414M (+3.3% Y/Y), $98M above consensus. Global comparable
sales grew 7.0% vs 4.2% consensus, primarily driven by higher pricing and an
increase in food attach in North America (average ticket +10% and food sales
+18%). Adj-operating income fell 19.8% Y/Y, with margin contracting 430 bps Y/Y to
15.1% vs 14.3% consensus. Labor cost growth, inflationary pressures, and
deleverage from Chinese travel restrictions were headwinds to margin, partially
offset by pricing in North America and sales leverage ex-China. We think SBUX’s
aggressive growth strategy in China now poses higher risk but remain optimistic,
given higher sequential quarterly sales. Additionally, SBUX’s guidance, digital
traction, equipment deployment, and buyback program resumption are positives. /
Siye Desta, CFA
October 21, 2022
09:46 AM ET... CFRA Adds Starbucks Corporation to U.S. Climate Change Friendly
Portfolio (SBUX 86.79****):
We add Starbucks to the portfolio, given our view that SBUX’s valuation looks
compelling, as we think SBUX is poised to return to strong EPS growth in FY 23
(Sep.), driven by resilient comparable store sales and new store openings. We
forecast robust demand for SBUX products despite inflationary headwinds,
especially relative to peers in the restaurant sub-industry. Although SBUX is
currently facing some stiff headwinds, we forecast an acceleration in earnings
growth over the next three years, driven by high-single digit comp sales growth,
increased store count growth, and margin expansion. SBUX will replace Target
Corporation (TGT 154 ***) in the portfolio, which was previously downgraded to Hold historical averages) with near-term headwinds from inflationary pressures and a
from Buy, as the company has faced significant headwinds from inventory
challenges, resulting in compression of the gross margin and we have concerns
about slowing same-store sales growth. / Matthew Miller, CFA
September 02, 2022
02:08 PM ET... CFRA Raises Opinion on Shares of Starbucks to Buy from Hold (SBUX
82.86****):
SBUX names Laxman Narasimhan as its new CEO. Mr. Narasimhan most recently
served as CEO at Reckitt Benckiser Group PLC. Prior to this stint, Mr. Narasimhan
held leadership positions at PEP, a collaborative partner of SBUX. The current
interim-CEO, Howard Schultz, is expected to remain until Q2 ‘23 to provide guidance
and help SBUX navigate through various headwinds, many of which, while acute for
SBUX, are sector-wide trends (i.e., wages, unionization, commodity costs, and China
growth slowdown). While these challenges are substantial, SBUX has taken steps to
address them, which, along with operational improvements (i.e., higher throughput
and better workplace projects), positions SBUX well relative to peers, in our view. In
addition, SBUX’s underlying fundamentals remain strong, with increasing comp
sales in Q2, despite a decline in China. As a result, we lift our 12-month price target
by $7 to $103, 31.1x (from 29.1x) our ’23 EPS of $3.30 (unchanged). ’22 EPS is also
unchanged at $2.99. / Siye Desta, CFA
Note: Research notes reflect CFRA's published opinions and analysis on the stock at the time the note was published. The note reflects the views of the equity analyst as of
the date and time indicated in the note, and may not reflect CFRA's current view on the company.
Redistribution or reproduction is prohibited without prior written permission. Copyright © 2023 CFRA.
August 03, 2022
05:05 PM ET... CFRA Retains Hold Opinion on Shares of Starbucks (SBUX 87.27***):
We lift our 12-month target by $16 to $96, 29.1x our ‘23 EPS of $3.30 (down from
$3.72; ‘22 lowered to $2.99 from $3.22) vs. 35x five-year average. Revenue of
$8,150M (+9% Y/Y) was $30M above consensus, while Q2 adj-EPS of $0.84 (-15%
Y/Y) beat by $0.08, driven by strong comp sales in the US (+9% Y/Y), partially offset
by a decline in China (-44% Y/Y), as 1/3rd of SBUX stores in the region were
temporarily closed. Despite the many near-term headwinds SBUX faces (e.g., macro
slowdown, wage pressures, higher commodity costs), coffee continues to prove its
viability as an affordable luxury, akin to the Lipstick effect. We are also encouraged
by the growth in average weekly sales, the morning daypart business (51% of sales),
and record high mobile ordering (47% of sales mix). Also, International revenue (ex
FX and China) was up 50% Y/Y, a positive sign that SBUX has plenty of growth
runway ahead, especially as Covid-19-related lockdowns in China ease and as SBUX
innovates and expands its digital capabilities / Siye Desta
May 23, 2022
01:24 PM ET... CFRA Keeps Hold Opinion on Shares of Starbucks Corporation (SBUX
74.09***):
We trim our 12-month target price by $7 to $80, or 24.8x our 2022 EPS estimate of
$3.22, below SBUX’s one year average forward multiple of 29.7x, but above the peer
average of 22.5x. SBUX announced an update to March 8th strategic announcement
whereby it suspended operations in Russia. SBUX now plans to entirely exit Russia
and no longer have a brand presence in that market. SBUX said it plans to pay
associates in Russia their salaries for the next six months and provide assistance as
they “transition to new opportunities outside of Starbucks.” SBUX has declined to
provide any estimates of the financial impact from this decision, but we note as of
March 4, 2022, the firm had 130 stores in Russia that were owned and operated by a
licensed partner. This represents less than 2% of total international stores. Weighing
still-decent sales trends with an expected margin contraction in 2022, we view the
shares as fairly valued versus peers, but worth holding. The shares also currently
yield 2.6%. / Catherine Seifert
May 04, 2022
12:26 AM ET... CFRA Keeps Hold Opinion on Shares of Starbucks Corporation (SBUX
74.33***):
We trim our 12-month target price by $13 to $87, or 23.4x our FY23 (Sep.)
operating EPS estimate of $3.72 (cut today by $0.20) and 27x our FY 22 operating
EPS estimate of $3.22 (cut by $0.13), above the peer average of 22.9x (to reflect
SBUX’s franchise value ) but below the shares’ one year average forward multiple of
30.2x to reflect some near term headwinds. Mar-Q operating EPS of $0.59 versus
$0.61 compared to our $0.62 EPs estimate, the $0.60 consensus forecast on 15%
revenue growth (above our 13% growth forecast). Global comp store sales rose 7%
as 12% higher North American sales were partly offset by 8% lower overseas sales
(including a 23% drop in China). Mar-Q operating margins also contracted 400 basis
points to 42.7%. Weighing the shares’ current discounted valuation (versus
weak Chinese economy, we view the shares (currently yielding 2.6%) as fairly valued
but worth holding. / Catherine Seifert
5
Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Analysts Recommendations Wall Street Consensus Opinion

Buy/Hold

Wall Street Consensus vs. Performance

For fiscal year 2023, analysts estimate that SBUX will earn
USD 3.40. For fiscal year 2024, analysts estimate that
SBUX's earnings per share will grow by 19.76% to USD 4.08.

No. of
Recommendations % of Total 1 Mo.Prior 3 Mos.Prior
Buy 8 22 8 7
Buy/Hold 5 14 5 6
Hold 22 61 22 21
Weak hold 0 0 0 0
Sell 0 0 0 0
No Opinion 1 3 1 0
Total 36 100 36 34

Wall Street Consensus Estimates

Fiscal Year Avg Est. High Est. Low Est. # of Est. Est. P/E
2024 4.08 4.44 3.81 32 24.21
2023 3.40 3.53 3.30 29 29.00
2024 vs. 2023 p 20% p 26% p 15% p 10% q -17%

Q2'24 0.84 0.99 0.74 15 117.71

Q2'23 0.65 0.73 0.57 29 153.01
Q2'24 vs. Q2'23 p 30% p 36% p 30% q -48% q -23%
Forecasts are not reliable indicator of future performance.
Note: A company's earnings outlook plays a major part in any investment decision. S&P Global Market Intelligence organizes the earnings estimates of over 2,300 Wall Street analysts, and
provides their consensus of earnings over the next two years, as well as how those earnings estimates have changed over time. Note that the information provided in relation to consensus
estimates is not intended to predict actual results and should not be taken as a reliable indicator of future performance.
Note: For all tables, graphs and charts in this report that do not cite any reference or source, the source is S&P Global Market Intelligence.

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Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Glossary

STARS Abbreviations Used in Equity Research Reports

Since January 1, 1987, CFRA Equity and Fund Research Services, and its CAGR - Compound Annual Growth Rate
predecessor S&P Capital IQ Equity Research has ranked a universe of U.S. CAPEX - Capital Expenditures
common stocks, ADRs (American Depositary Receipts), and ADSs (American CY - Calendar Year
Depositary Shares) based on a given equity's potential for future performance. DCF - Discounted Cash Flow
Similarly, we have ranked Asian and European equities since June 30, 2002. DDM - Dividend Discount Model
Under proprietary STARS (Stock Appreciation Ranking System), equity analysts EBIT - Earnings Before Interest and Taxes
rank equities according to their individual forecast of an equity's future total EBITDA - Earnings Before Interest, Taxes, Depreciation & Amortization
return potential versus the expected total return of a relevant benchmark (e.g., EPS - Earnings Per Share
a regional index (MSCI AC Asia Pacific Index, MSCI AC Europe Index or S&P 500® EV - Enterprise Value
Index)), based on a 12-month time horizon. STARS was designed to help FCF - Free Cash Flow
investors looking to put their investment decisions in perspective. Data used to FFO - Funds From Operations
assist in determining the STARS ranking may be the result of the analyst's own FY - Fiscal Year
models as well as internal proprietary models resulting from dynamic data P/E - Price/Earnings
inputs. P/NAV - Price to Net Asset Value
PEG Ratio - P/E-to-Growth Ratio
S&P Global Market Intelligence's Quality Ranking PV - Present Value
(also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and R&D - Research & Development
S&P Capital IQ Earnings & Dividend Rankings stability of earnings and dividends ROCE - Return on Capital Employed
are deemed key elements in establishing S&P Global Market Intelligence's ROE Return on Equity
earnings and dividend rankings for common stocks, which are designed to ROI - Return on Investment
capsulize the nature of this record in a single symbol. It should be noted, ROIC - Return on Invested Capital
however, that the process also takes into consideration certain adjustments ROA - Return on Assets
and modifications deemed desirable in establishing such rankings. The final SG&A - Selling, General & Administrative Expenses
score for each stock is measured against a scoring matrix determined by SOTP - Sum-of-The-Parts
analysis of the scores of a large and representative sample of stocks. The range WACC - Weighted Average Cost of Capital
of scores in the array of this sample has been aligned with the following ladder
of rankings: Dividends on American Depository Receipts (ADRs) and American Depository
Shares (ADSs) are net of taxes (paid in the country of origin).
A+ Highest B Below Average
Qualitative Risk Assessment
A High B- Lower
A Above C Lowest
Reflects an equity analyst's view of a given company's operational risk, or the
risk of a firm's ability to continue as an ongoing concern. The Qualitative Risk
B+ Average D In Reorganization
Assessment is a relative ranking to the U.S. STARS universe, and should be
NC Not Ranked reflective of risk factors related to a company's operations, as opposed to risk
and volatility measures associated with share prices. For an ETF this reflects on
EPS Estimates a capitalization-weighted basis, the average qualitative risk assessment
CFRA's earnings per share (EPS) estimates reflect analyst projections of future assigned to holdings of the fund.
EPS from continuing operations, and generally exclude various items that are
viewed as special, non-recurring, or extraordinary. Also, EPS estimates reflect STARS Ranking system and definition:
either forecasts of equity analysts; or, the consensus (average) EPS estimate, ««««« 5-STARS (Strong Buy):
which are independently compiled by S&P Global Market Intelligence, a data Total return is expected to outperform the total return of a relevant benchmark,
provider to CFRA. Among the items typically excluded from EPS estimates are by a notable margin over the coming 12 months, with shares rising in price on
asset sale gains; impairment, restructuring or merger-related charges; legal an absolute basis.
and insurance settlements; in process research and development expenses; ««««« 4-STARS (Buy):
gains or losses on the extinguishment of debt; the cumulative effect of Total return is expected to outperform the total return of a relevant benchmark
accounting changes; and earnings related to operations that have been over the coming 12 months.
classified by the company as discontinued. The inclusion of some items, such
as stock option expense and recurring types of other charges, may vary, and ««««« 3-STARS (Hold):
depend on such factors as industry practice, analyst judgment, and the extent Total return is expected to closely approximate the total return of a relevant
to which some types of data is disclosed by companies. benchmark over the coming 12 months.
««««« 2-STARS (Sell):
12-Month Target Price Total return is expected to underperform the total return of a relevant
The equity analyst's projection of the market price a given security will benchmark over the coming 12 months.
command 12 months hence, based on a combination of intrinsic, relative, and
««««« 1-STAR (Strong Sell):
private market valuation metrics, including Fair Value.
Total return is expected to underperform the total return of a relevant
benchmark by a notable margin over the coming 12 months, with shares falling
in price on an absolute basis.
Relevant benchmarks:
In North America, the relevant benchmark is the S&P 500 Index, in Europe and
in Asia, the relevant benchmarks are the MSCI AC Europe Index and the MSCI AC
Asia Pacific Index, respectively.

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Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
Disclosures

Stocks are ranked in accordance with the following ranking methodologies:
STARS Stock Reports:
Qualitative STARS rankings are determined and assigned by equity analysts. For reports
containing STARS rankings refer to the Glossary section of the report for detailed
methodology and the definition of STARS rankings.
Quantitative Stock Reports:
Quantitative rankings are determined by ranking a universe of common stocks based on 5
measures or model categories: Valuation, Quality, Growth, Street Sentiment, and Price
Momentum. In the U.S., a sixth sub-category for Financial Health will also be displayed.
Percentile scores are used to compare each company to all other companies in the same
universe for each model category. The five (six) model category scores are then weighted
and rolled up into a single percentile ranking for that company. For reports containing
quantitative rankings refer to the Glossary section seof the report for detailed methodology
and the definition of Quantitative rankings.
STARS Stock Reports and Quantitative Stock Reports:
The methodologies used in STARS Stock Reports and Quantitative Stock Reports
(collectively, the "Research Reports") reflect different criteria, assumptions and analytical
methods and may have differing rankings. The methodologies and data used to generate
the different types of Research Reports are believed by the author and distributor
reasonable and appropriate. Generally, CFRA does not generate reports with different
ranking methodologies for the same issuer. However, in the event that different
methodologies or data are used on the analysis of an issuer, the methodologies may lead
to different views on the issuer, which may at times result in contradicting assessments of
an issuer. CFRA reserves the right to alter, replace or vary models, methodologies or
assumptions from time to time and without notice to clients.
STARS Stock Reports:
Global STARS Distribution as of December 31, 2022
Ranking North America Europe Asia Global
Buy 37.3% 36.2% 52.6% 40.1%
Hold 54.3% 55.7% 38.6% 51.5%
Sell 8.4% 8.0% 8.8% 8.4%
Total 100.0% 100.0% 100.0% 100.0%
Analyst Certification:
STARS Stock Reports are prepared by the equity research analysts of CFRA and its
affiliates and subsidiaries. Quantitative Stock Reports are prepared by CFRA. All of the
views expressed in STARS Stock Reports accurately reflect the research analyst's
personal views regarding any and all of the subject securities or issuers; all of the views
expressed in the Quantitative Stock Reports accurately reflect the output of CFRA's
algorithms and programs. Analysts generally update STARS Stock Reports at least four
times each year. Quantitative Stock Reports are generally updated weekly. No part of
analysts’ or CFRA’s compensation was, is, or will be directly or indirectly related to the
specific rankings or views expressed in any Stock Report.
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This Research Report is published and originally distributed by Accounting Research &
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Stock Report | March 18, 2023 | NasdaqGS Symbol: SBUX | SBUX is in the S&P 500
Starbucks Corporation
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